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Optimality

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Abstract

Theoretical work on the optimality of perfect competition has been so extensive that, despite the well-known deviations of perfect competition from optimality, there is a strong predisposition among economists to assume that any move away from perfect competition is a move away from an ideal state. Our suggestion that the only kinds of competition that can exist in practice are semi-perfect or fixprice competition will be likely, therefore, to attract the immediate criticism that such models imply a fall from grace. But, before we accept that conclusion, we need to consider two important questions: (1) to what extent can perfect competition be accurately described as an ideal state? (2) what are the positive and negative features, from a welfare point of view, of the alternative forms of competition described above?

Keywords

Technical Progress Relative Prex Allocative Efficiency Perfect Competition Entrepreneurial Spirit 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

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Copyright information

© Harold Lydall 1992

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