Perfect Markets: defined by the Sticky-Marketing.com monthly magazine |
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Perfect Markets are an idea or assumption created by economists to describe what would be perhaps the ideal conditions for capitalist market places to function. The economists' perfect market includes the concepts of:
Access to all the Information: everyone in the market knows everything, all consumers know all the options available to them, all producers know all the other options available to them.
Rationality: players in the market make decisions based on rational reasoning. A very difficult one to define accurately as many benefits are very non economic such as in the case of fashionable items or items which embody particular lifestyle values (see one example: Harley Davidson).
No barriers to entry or exit: producers and consumers are freely able to enter and leave the market place, thus for example if excessive profits are being made in a particular market, new producers will be attracted to enter the market and supply items, this increased competition will bring the profits back to a normal level and balance the needs of consumers. As you can see, just these three factors are rarely present in most markets and it is in fact specific imperfections in various markets that provide opportunity giving great advantage to those who can work out the best strategy to take advantage of market imperfections. 07/08/2001 Use your browser back button or
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