Let’s get things ready. Economics academics came up with the idea of “markets with perfect
competition” somewhere between charts of supply and demand and your last brain cell. The
idea is that it’s a beautiful and efficient system where everyone sells the same commodity,
no one cheats, and prices change mysteriously like cosmic karma.
So cute, right?
Thinking that “everyone does their part” will make your group project work well is like
assuming that perfect competition will happen. In a world where Amazon controls your
buying habits, Starbucks charges $8 for milk froth, and the housing market wants your soul
as a down payment, this is a utopian fever dream.
So get your pricey cappuccino, open that tab you say is for “learning about personal
finance,” and let’s talk about why economists constructed their whole thing around a
made-up ideal of perfectly balanced markets.
Step One: Act Like Life Is Fair (Spoiler: It’s Not)
The notion behind perfect competition is that there are an endless number of customers and
sellers, and none of them have any power. It seems like everyone is making the same thing,
selling it for the same price, and working on good vibes and moral purity.
In other words, it’s like Disneyland for the economy: everyone is equal, no one lies, and
prices are always fair. The kind of harmony that only PowerPoint presentations can show.
In real life?
When a corporation releases a “limited edition flavor” or a TikTok fad goes viral, things go
crazy. Viral capitalism kills perfect competition.
Let’s be brutally honest. If there were ideal competition, Starbucks wouldn’t exist because all
cafes would taste the same.
Fashion companies couldn’t charge $70 for beige shirts that were “made sustainably.”
All influencers would get paid the same amount for ads. (Oh, the tantrum that would cause.)
Markets want to show off how efficient they are, but declaring “everyone’s special” is like
saying “perfect competition.” Which means that no one is.
In the meantime, capitalism is in the corner doing pushups and saying “monopoly.”
Step Two: Everyone Knows Everything (Of Course They Do)
“Perfect information” is a funny idea that says that every buyer and seller knows exactly
what’s going on. You know, like how we all read the rules and terms before agreeing to them.
It seems like you, me, and Brenda from Iowa all know a lot about pricing trends, production
costs, and the effects of the economy. Because that’s how things really are.
This is what real markets look like:
“I saw someone on TikTok say that avocado toast won’t go up in price.”
“My coworker said that crypto is back.” “Should I buy Dogecoin again?”
“This brand said it was organic.” That means good, right?
Perfect information is based on the idea that no one is ignorant. Real information
presupposes universal participation.
Textbooks on economics say that choices are logical. Half of Americans, on the other hand,
treat their checking account like Schrödinger’s box: they don’t know if there is money in it or
not.
Step Three: No one makes more money (Cue the Capitalist Meltdown)
The logic completely falls apart here: you can’t generate more money in a “perfectly
competitive market.” Prices are the same for everyone, competition is tough, and everyone
is barely getting by. In other words, it’s socialism with more forms to fill out.
So, yes, corporate America would rather catch fire than let it happen.
Think about telling Apple that the new iPhone should be priced appropriately and that
everyone should make the same small amount of money. Tim Cook would hurl your
microeconomics book into a volcano himself.
Let’s be honest: the business world doesn’t desire perfection; it wants to be in charge. In
theory, perfect competition works, but in real life, markets are driven by greed, branding, and
caffeine.
To be in the U.S., we would need:
No ads at all. Goodbye, Super Bowl ads.
Same things. (Enjoy your daily dosage of beige emotions.)
No lobbying by businesses. (That lasted five seconds.)
The only place that comes close? Markets for farmers. And even then, Joe’s Tomatoes taste
worse than Marcy’s since she smiles more and takes Venmo.
Step Four: Everyone Can Come and Go as They Please (Except, You Know, Everyone)
There are “no barriers to entry” in perfect competition. Anyone can start a business
whenever they want to. Nice idea.
simply because Chad’s Econ book said “just enter the market” doesn’t mean you’re going to
open a petrol station. You’re filling out depression paperwork and launching a GoFundMe.
Free entrance sounds fantastic until you have to deal with beginning fees, rules, supply
chains, and all the other stupid things the economy throws at you.
In theory, ideal markets mean that no one person is in charge. In real life, Jeff from Econ 101
tried to establish a t-shirt business but ended up drop-shipping from Alibaba before quitting
to sell crypto classes.
Perfect competition implies that only the best people survive, but in actual life, reality TV
stars have their own tequila brands.
Step Five: People Who Buy Things Are in Charge of the World (Until Rent Is Due)
This “perfect” market system lets consumers make all the choices. The “laws of demand” run
this retail utopia. You choose what’s important. You are in charge of the economy. You are in
charge.
But no, you don’t.
You “choose” from a list of possibilities that four companies have carefully put together, all of
which are pretending to compete with each other. You “shape the market” the same way
your cat influences your life: you pay for it.
The model says that supply and demand are perfectly balanced. In the real world, there are
74 brands of cereal, three housing alternatives that will drive you crazy, and $7 kombucha
that no one knows how to say.
In perfect competition, the consumer always wins. Please explain rent to me again.
So where does it really exist? (Clue: Not in the real world, just in professors’ dreams)
Like astrology likes vibes, economics loves math. If you ignore how people act, such brand
loyalty, buzz trends, dumb risks, and the fact that life in 2025 is so unpredictable, the idea of
flawless markets only works.
Karen might say, “Those apples look shinier, I’ll pay more,” even at a fresh fruit store. Good
job! The farmer’s market isn’t ideal either.
The Marvel multiverse is like perfect competition. It is out there… someplace. Not here, not
now, and not in this economy.
Markets are chaotic, emotional train wrecks fueled by coffee, greed, and sneaky corporate
manipulation. And we keep acting like it’s reasonable, because as soon as we realize it’s
not, the business school brochures lose their shine.
Congratulations if you made it to the finish. If you’re an econ major, you probably detest
reading this. If not, you probably like chaos theory that looks like market structure. There is
no such thing as perfect competition, but you can definitely overanalyze your own budget.
So go ahead and buy that expensive coffee. You’re already living in an imperfect market. At
least let’s make it taste decent.
