The availability of many players in the market has ensured that prices are constant with the market deciding the prices. The wheat farmers can only use price to compete if they reduce their prices. The United States government controls pricing which ensures consumers are not exploited. Setting of maximum prices and minimum pricing is important in protecting interests of the poor who depend on this product for survival. Also, this protects the small firms from unfair competition from already established companies. This government regulation ensures standardization of prices.
A perfect competitive environment is where there exist many buyers and sellers offering a homogeneous product to the market. The structure is characterized by many buyers and sellers and therefore no firm controls the prices single handedly (Machovec, 2007). Also the market structures are very similar, and lastly firms are free to enter or exit the market. There is little chance of a market to poses these three conditions; therefore there exists no market with complete perfect competition though some industries have achieved an almost perfect competitive structure. This market is desirable for the society because prices charged are reasonably fair. Therefore a manufacturer cannot increase prices of goods as they risk losing their market share; sellers in such a market are price takers and not makers. Existence of perfect competition ensures that consumers have constant supply and distributers have a ready demand. Economists believe that a perfect competitive market is the best structure in protecting consumers’ interests (Machovec, 2007).
Machovec, F. (2007). Perfect Competition and the Transformation of Economics. New York,
N Y: Routledge.
Smith, V. & Antle, J. (2009). The Economics of Wheat Markets. London: Cabi Publishing.