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This exposed them to swings in the economy, as they were so large that they were a major player inside the sector. While at the same time, many of the different elements of perfect competition existed. This is significant, because it shows how the overall model has been changing. At which point, many competitors have been adapting to: these shifts and are using tactics that are increasing their risks. In many ways, one could argue that the new definition has meant that these organizations are not experiencing perfect competition. Instead, they are engaging in activates that will increase their overall exposure to host of events (that are disguised as perfect competition). This has led directly to the shifts in this definition, which have caused different economic calamities (i.e. The financial crisis).
Clearly, the definition of perfect competition has been continually evolving over the last several decades. This is because globalization and improvements in technology have meant that there were changes in these views. as, these two factors are working together to: influence how consumers and businesses are interacting with each other. This has led directly to shifts in the way many corporations are: viewing perfect competition and how they fit in line with this definition. Where, a variety of organizations have been seeking out new ways to maximize their profits based upon these changes. This has caused many executives to begin to engage in actions that will harm their business model.
What they are doing is following the definition of perfect competition...
However, to increase their overall bottom line they will engage in actions that will help to push the organization to: seek out weaker competitors or those companies that have a unique product / service. At which point, they will acquire them and begin having the new entity help in supporting their objectives of increasing their profit margins.
In this aspect, one could argue that perfect competition is occurring with these kinds of natural shifts that are taking place. Yet, beneath the surface, these actions mean that the definition is changing. As you will see a host of organizations that will begin to: dominate the sector. Once this occurs, it means that perfect competition has changed, with these businesses no longer fitting into this category. This is because, the desire of executives to increase their profits as much as possible has meant that a shift has occurred (which will have a direct impact upon the size of the new entity). At which point, these organizations will become exposed to changes in the economy or industry (based upon these views).
Bibliography
Makowski, L. (2001). Perfect Competition. Journal of Economic Literature, 34, 479 -- 535.
Schaeck, K. (2009). Are Competitive Banking Systems more Stable. Journal of Money and Credit, 14, 51-73
Schaeck, K. (2010). Baking Competition. European Financial Management, 17, 35 -- 58.
Sugita, Y. (2009). Matching, Quality…
Bibliography
Makowski, L. (2001). Perfect Competition. Journal of Economic Literature, 34, 479 -- 535.
Schaeck, K. (2009). Are Competitive Banking Systems more Stable. Journal of Money and Credit, 14, 51-73
Schaeck, K. (2010). Baking Competition. European Financial Management, 17, 35 -- 58.
Sugita, Y. (2009). Matching, Quality Upgrading and Trade. Institute of Economic Research, 64, 1 -- 49.
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