Comparison of economic efficiency of the model of perfect competition Essay

Comparison of economic skill of the model of perfect challenger with that of monopoly markets - Essay ExampleMoreover, their ability to exploit economies of scale also al miserables them to sell their products at very low prices which argon often less than the cost price of other sellers, thus allowing the larger companies to easily grind them out of the production line3. However, monopoly seller, as mentioned earlier, is highly likely not to satisfy the complete demand for its product so that it could charge a premium price. Therefore, the monopoly seller fails to take the full advantage of economies of scale, unlike many firms in monopolistic, perfectly competitive and oligopolistic markets4. Other than technical, allocative and productive inefficiencies, monopolies are also likely to be X-inefficient. American economic expert Liebenstein argued that regardless of the level of production, monopolies are always X-inefficient because of the absence of competitive pressures5. Ther efore, there costs of production are always higher than it would be within perfectly competitive on even monopolistic markets. The uniform is true because monopolies sellers are most likely to own technologies, assets, and machines that are not operating at their fullest or which are not needed. Furthermore, they are also likely to overpay people, thus leading to cost inefficiencies6. In presence of competition, firms spend great deal of time and energy over ensuring that they decrease their costs to finish possible. Consider the example of the US airline industry where strong competitive pressures have forced companies to search more cost effective pressure. Competition forced Southwest Airlines to create a forward-looking business model aimed at cost effectiveness where the company flies its aircrafts for more than 11 hours a day, uses said(prenominal) aircrafts for trim down maintenance and training costs, flies short haul, uses dynamic...This paper is an attempt to explore the economic efficiency outcomes of monopoly markets with that of perfect competition markets. Furthermore, the paper would also attempt to present a possible presidency polity to improve efficiency within the markets. The focus of policymakers should be at creating policies and programs that facilitate competition within different markets, especially within monopolies markets.However, policymakers should draw a line for their intervention. Even in the worst times, direct political science intervention or control is not a viable long-term option for creating efficiency because not only it is inefficient but ineffective.The only policy that governments should pursue is to ensure that monopolistic and oligopolistic markets could move towards a perfectly competitive market. Interestingly, in many cases, it is the existing government policy and structure, which creates the costs and hurdles for new entrants to enter into the market. Therefore, governments all over the world should t ry to follow the economic models of countries like Hong Kong, Singapore, Australia, New Zealand and Switzerland where the government intervention within the markets is minimal. Furthermore, the cost of starting up a business, running the business and winding up the business are also much lesser than the rest of the world.The focus should be on reducing the excessive costs and time required to start, operate and wind up a business, opening up borders to other companies, facilitating free trade and research and development.