The rice industry, a perfect competition?

Perfect competition exists when there are a very great number of small companies operating in the same or very analogous commodities or services, and none of who can be affected by the price by increasing output or restricting it. Furthermore, the companies have perfect knowledge about costs and prices across the market. Everyone is aware of affirm of everyone else's price and has perfect information on the tastes of buyers. In a perfect competition, there are no barriers to enter. One example of an industry in Malaysia that has perfect competition is agriculture, mainly rice. Nowadays as a lot of countries today store up oil as an insurance stratagem to defend themselves during times of crisis, several developing-market countries, particularly across Asia, have their own government-mandated urgent situation rice reserves.

You can see that perfect competition is never likely to exist in reality due to mainly the barriers of entry. Another industry is said to be perfectly competitive is the petrol industry, but usually it isn’t the case. The barriers to entry are enormous in terms of capital expenses, digging, franchise and many more.

The nearest we get to perfect competition in the developed world will be car auctions, antique markets, hens' egg sales and so on. Maybe, a considerable street or an extensive market for fruits and vegetables, it will be quite near to being a perfect competition. Stocks, whether it is the exchange or government stocks, they could be mentioned as being close to a perfect competition. The reason for this due to the fact that most traders are very well informed and no single trader can affect the market price.