THE RICE INDUSTRY IS A PERFECT COMPETITION?

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THE RICE INDUSTRY IS A PERFECT COMPETITION?




Perfect competition exists when there are a very large number of small firms that operating in the identical(homogeneous) product or services and none of who can be affected by the price by increasing output or restricting it because both buyers and sellers are price takers. 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. So, there is several company in Malaysia that produce rice such as BERNAS SDN BHD, FAIZA SDN BHD, NINAMAJU SDN 
BHD and others



Figure 1: Profit maximization using average and marginal revenue and cost curves
 
 
What we 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.

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