By wong, Updated
I'm going to tell you a story about a world where everything is in perfect competition. No one is better than the other and no one is dominant enough to set prices. Because they are identical, the lack of uniqueness prevents domination by one company. Let's look at different stories around town.
I got this cool phone from the Fone Man for $50.
I got this phone from Green Phones for $50. Fone Man sells the same thing. It doesn't matter where I get my phone. This town has different companies that sell the same thing.
My phone is cool too, I got my phone from YOLO Inc. It was $50.
I got my cool phone from Totally Awesome Phones. This phone was $50.
As you can see there are many businesses that sell the same product. The phones look similar, have similar features and they are sold at similar price. Why similar prices? Since every company sells identical products, businesses have little or no influence on prices. A perfectly competitive market means every company gets a fair shot, but it lacks variety.
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