Perfect Competition
With the increasing need for computer software and applications, these products sometimes are in a perfectly competitive market within my area. The sellers make sales to IT firms and other subsidiary users of computer software and applications. No single seller is big enough to have the power of the market in setting the price of this product. Well, this condition varies from time to time and therefore the characteristics of this model match real world conditions where not all the sellers are price takers.
However, most of the time throughout the year, the sellers are the price takers (Petri, 2004). Like in a real-world condition, this condition is thus not a perfectly competitive market because the conditions facilitating an absolute competitive market are very strict. In most cases, the sellers set the prices for the products in the market. The increasing need for software applications along with the increasing sellers of the products has conflicted through price setting to ensure sales and purchases are made.
As a result of the increasing demand for computer software applications, there has been an introduction of counterfeit goods infiltrating into the market. The substandard goods have destabilized the market at some point as the sellers in this category are selling goods to ignorant buyers. The stabilization of the market, however, is realized when the government takes action by carrying out research on the goods being sold in the market. In the past, the government has been involved in directing the mass from buying goods which are not standardized.
When such action is taken, we remain with infinite buyers and a relatively medium group of sellers who have been favored by the government's action. The market at such a point is in a much lesser perfect condition than before. Generally, the competition environment depends on the number of buyers and sellers in the market among other factors. The market condition is not always in a perfect state although it takes that form in peak selling periods (Petri, 2004).
