By On Feb 27, 2019 Free Resume
Perfect competition establishes an ideal framework for establishing a market. But that market is flawed and has a couple of disadvantages. The first one is the absence of innovation.
Governments play a vital role in market formation for products by imposing regulation and price controls. They can control entry and exit of firms into a market by setting up rules to function in the market. For example, the pharmaceutical industry has to contend with a roster of rules pertaining to research, production, and sale of drugs.
Information about the ecosystem and competition in an industry constitutes a significant advantage. For example, knowledge about component sourcing and supplier pricing can make or break the market for certain companies.
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