Coca Cola Perfect Competition Industry

When there is a large number of sellers and a large number of buyers in a market, that market is regarded as a perfectly competitive market or industry. In a perfectly competitive market, a single firm cannot dictate the pace and the selling price (Khan Academy, n.d.). In other words, one firm cannot set the prices and the competitors are obligated to market prices. What is fascinating about a perfectly competitive industry is that the barriers that prevent new firms from entering the industry are flexible; that means there are minor barriers of entry as well as little or no barriers to exit the industry (Rittenberg & Tregarthen, 2009). Additionally, buyers and sellers have all the necessary information to make a decision to buy or sell a product.

This is because the barriers to entry into the industry are relatively high for new firms and that the Average Total Cost (ATC) and Average Variable Cost (AVC) for new firms are relatively high compared to the two large soft drink manufacturers because of economies of scale. Additionally, not many firms in their industry produced the same or identical product to make the industry competitive and the information is not freely available because the recipe in Coke’s case is not public record. Therefore, the assumption that Coca-Cola and Pepsi are most likely not to be produced in a perfectly competitive industry is

This is because; there are large numbers of buyers and large numbers of sellers in this market. Similarly, this industry provides identical products as well as a regulated interest rate providing long run normal returns. Government bonds and corporate stocks, therefore, are most likely to be produced in a perfectly competitive industry because, the market- buyers and sellers look up the market price for transactions (price takers) (Rittenberg & Tregarthen, 2009).
Taxicabs in Lima, Peru
Perfectly competitive— from the information deduced about Taxicabs in Lima, Peru, it is obvious that this is a model of a perfectly competitive industry. There are no barriers to entry and there are no restrictions on exit. This scenario indicates that there are numerous sellers and as well as a large number of buyers. The services are homogeneous in nature and this eventually will keep prices very low and buyers have alternative choices. This is most likely a perfectly competitive industry.