My Best Pick 2015

Where are you, George?

Asset values are way out of whack but nobody is stepping forward to point out that the emperor has no clothes

Vishal Koul

Ever since I can remember, free market theorists have been advocating ‘pure and perfect competition’ (PPC). This ideal state, that is, PPC hinges on the over-simplifying assumption of a large number of buyers and sellers (incapable of distorting prices individually), any number of firms entering/exiting the market without any imposed restrictions or transaction costs and every market participant knowing everything at all times. The end objective, of course, is to provide goods and services to maximum number of people at minimum cost. While this is the best outcome for consumer markets, it would kill the ‘animal spirits’ in the producer markets, thereby curtailing supply and pushing up prices for consumers, thereby destroying the very crux of PPC.