I said...: "I don't think the level of competition is determined by the amount of firms that are in an industry or economy."
Jamil said..."This statement does not even appear to pass the test of logic, unless I'm missing something." Frankly, I see this as the negative influence of neoclassical economics. competition isn't some quantity that increases as you add more "competitors". that is reductionist to the extreme. Competition is a social relation between firms in an industry and out of an industry. There can be an industry with 100 firms and very little competition because the level of demand is high or the technological differences between firms is very small or capital flows are regulated/blocked by a myriad of factors. On the other hand one could have two firms that have pushed out every other firm and are still intensely competitive and constantly innovating technologically while capital flows are relatively uncontrolled. I just don't think the number of firms is all that important. what's important is the composition of these firms. If ten firms enter who can produce at exactly the average level in the industry, how exactly is their more competition? they don't have a cost advantage and can't declare a price war. -- -Nathan Tankus ----------------------------------------------------------------------------------------------------------------------------------------------- _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
