Re: [OPE] Asunto: US wheat market - perfectly competitive?

From: Anders Ekeland <>
Date: Thu Dec 16 2010 - 18:29:12 EST

Hi Alejandro,

I do not think there is a real-life example, but let me quote from
Samuelson and Nordhaus text-book, 2010:

"Adam Smith recognized that the virtues of the market mechanism are
fully realized only when the checks and balances of perfect
competition are present. What is meant by perfect competition? It is
a technical term that refers to a market in which no firm or consumer
is large enough to affect the market price. For example, the wheat
market is perfectly competitive because the largest wheat farm,
producing only a minuscule fraction of the world's wheat, can have no
appreciable effect upon the price of wheat." (p. 35)

Google "perfect competition" and wheat market - and see how wide
spread the myth is.

So I am looking for an article/book that refutes this myth.

Anders E

At 14:33 16.12.2010, Alejandro Agafonow wrote:
>But... What is the exasperation about...? There is no real-life
>example, unless you consider the counterfactual propositions of
>neoclassicals and Ian Write an answer...
>A. Agafonow
>From: GERALD LEVY <>;
>To: Outline on Political Economy mailing list <>;
>Subject: Re: [OPE] US wheat market - perfectly competitive?
>Sent: Thu, Dec 16, 2010 12:36:45 PM
> > The myth is in many (most?) text-books, it even creeps
> > into Stiglitz otherwise excellent "Nobel" prize lecture etc. etc.
>Hi Anders:
>Most everything which is in one introductory economics text is in all
>others! There was a scholarly article published years ago which showed
>basically that they all plagiarize each other! (Michael P would recall
>the exact citation, I think, because he noted it previously).
>In any event, the reason it's in the texts is (I think) curious: if
>you teach market structures, including perfect competition, then students
>will ask for - and demand! - examples. I have my own way of dealing with
>this: after going over the characteristics of a perfectly competitive
>market, I ask _them_ for examples and tell that that whatever they suggest
>I'll write on the board and we'll discuss afterwards. Then - one by one -
>I'll explain to them in no uncertain terms why every single example
>they gave is wrong. This will eventually lead them to ask (sometimes
>with exasperation): what _is_ an example of perfect competition? I
>won't answer that question directly but it usually leads into a discussion
>on the meaning of capitalist ideology.
>In solidarity, Jerry
>ope mailing list
>ope mailing list

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Received on Thu Dec 16 18:30:57 2010

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