No Examples of Truly Competitive Markets
Posted on September 2, 2016
When people praise competitive markets, most of them have no idea what they are talking about. A perfectly competitive market, as close as we can come to it, is a spot market for a perfectly indistinguishable commodity with many buyers and sellers.
Kerosene in the days before Standard Oil was a good example. What automatically happened was that the price jumped all over the place, and tomorrow you might pay ten times as much as you paid today. That made it very hard to rely on kerosene for anything important, like fueling manufacturing machines. Everyone heaved a sign of relief when Standard Oil cornered the market and set reasonable, stable prices. (However the prices were rather low because of Standard Oil’s upstream oligopolies.)