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Pastimes : Austrian Economics, a lens on everyday reality -- Ignore unavailable to you. Want to Upgrade?

To: Neocon who wrote (61)	12/14/2001 10:58:47 AM
From: Don Lloyd	Read Replies (1) \| Respond to of 445

Neocon - 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........ Thank you for the reply. While many of the things you note have significance, a majority would seem to be at variance with the Austrian approach. In particular, perfect knowledge and perfect competition are anathema to Austrians. The success of the free market in large part derives from the fact that actual market-derived prices virtually encapsulate everything that is required to coordinate a large and complex economy. The pursuit of perfect knowledge quickly encounters diminishing returns, as the cost of acquiring information is high and a fundamentally uncertain future limits the ultimate value of the knowledge that can be acquired. The pursuit of perfect competition has little value except in horse racing, and it only has it there because the goal is not to win a race, but to provide a gambling base with a reduced dispersion of results. The appropriate producer for a given economic good is the one who most effectively utilizes any advantages he may have, and the more, the better. I'll limit myself to those comments for now, rather than introduce additional considerations. Thanks, Don