The paper “ The Post Keynesian and Austrian Theories of Perfect and Imperfect Competition” is a thrilling variant of the essay on macro & microeconomics. Competition is a term that has a wide range of meanings depending on the field to which it is being referred. In the field of economics, competition is expressed in terms of entrepreneurial rivalry and that is why the perfect type of competition is never considered a competitive behavior. This is because of the fact that the state of perfect competition leaves the situation of decreased average cost and increased returns (Lavoie, 1992).
This means that increasing the demand of the products in the market will put some strain in the industries to increase production as far as the out is concerned. This kind of situation is what led the researchers to conclude that perfect competition will never be a theory to analyze the increase in the scale of returns (Hannagan, 2005). Competition refers to the process of dis equilibrating the processes in the market for the firms to be able to take advantage of the resources in terms of market share and segmentation for the purposes of financial performances.
Thus, the aim of this paper is to compare and contrast Austrian and Post-Keynesian theories of the competitive process. The post-Keynesian theory of perfect and imperfect competitionThe theory of perfect form of competition is said to assume that there is an aspect of full usage of resources meaning that there is no excess hence there is a market force that does not interferer with the market as far a the sellers and the buyers are concerned (Kirzner, 2002).
This is unlike the imperfect competition, which is known to interfere greatly with the mechanisms of market by causing destabilization. This kind of competition is found in the monopolies and the oligopolies form of businesses, which generate excessive capacities (Lavoie, 1992). The theory of perfect competition is actually based on the symmetry or balance existing between the forces of supply and demand. This is whereby the prices in the market are smoothly driven together to an extent of being grouped together.
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