| It drives down prices, and motivates searches for competitive advantages, such as improved service, innovations in design, and quality control for enhanced reliability. This occurs when competition is perfect, that is, there are no extraneous factors favoring any competitor, for example, inadequate capitalization of some entrants, collusion to disfavor a competitor, or government interference on behalf of a competitor. Other factors influencing competition are disparities in unionization, collusion with suppliers to disfavor a competitor, or discrimination on the basis of race, creed, or sex. It is also necessary for consumers to have "perfect knowledge", that is, to know all that is relevant in comparing goods, services, and prices, so that they have all of the information necessary to maximize their purchase. Of course, perfect knowledge is mainly an ideal to be aimed for. In such a situation, prices should reflect value, on average, and there should be a full array of choices to suit different needs........ |
