The Perfect Competition World
perfect competition
noun
- the situation prevailing in a market in which buyers and sellers are so numerous and well informed that all elements of monopoly are absent and the market price of a commodity is beyond the control of individual buyers and sellers.
Qs and As
How new entrepreneurs will be created in a perfect competition market in the following example?
An entrepreneur wants to start a business that requires high-end equipment. The price of high-end equipment is very high because it includes the labor cost of many people. But to run that high-end equipment, only one person is needed.
How will the person buy the equipment?
In perfect competition, every participant is a price taker, and marginal costs should meet marginal revenue. But how both can be possible in this situation?
If the entrepreneur takes a loan (some labor cost) of other participants, how will he/she repay the amount? As the entrepreneur can't set the price for his/her service, and the market price for the service is already low because the labor cost to run the equipment is too small.
Proposed Suggestion:
Competitors themselves can pay for the equipment, and the price gets adjusted according to it. The extra price incurred will be deducted algorithmically and can be used to buy the equipment. The competitors with the same specialization will also have the responsibility to confiscate the equipment, in case the entrepreneur who gets the equipment is found to be a frivolous or involve in any kind of fraud, as the competitors are the one who will bear the cost of equipment. It can act as a decentralized way to scale the system.
What is Externalities and how it can be handled?
In economics, an externality is a cost or benefit that affects a party who did not choose to incur that cost or benefit.
Proposed Solution for adverse externalities:
Pigovian Tax:
https://en.wikipedia.org/wiki/Pigovian_tax
And this tax can be added into UBI (Universal Basic Income) or to those who work on reversing the bad externalities.
How to collect the tax?
Every smart contract should have a generic code that links to government smart contract, where govt smart contract can fix the tax rate and collect the tax for every transaction. The smart contract will be invalid without this code.
How can there be universal basic income in perfect competition?
By algorithm deduction of income from working people, and then paying back a fixed and equal amount to all citizens in this interdependent world.
How there will be a technological improvement if sellers are price takers?
Sellers can earn more by increasing their productivity and efficiency through technological improvement for example. More production in less time means more earning with the same price per unit. But if some entrepreneurs or researchers managed to do technological improvement, they have to hide the protocol in order to make the profits. This will create a disadvantage for society as a whole. So, competitors can provide incentives to the seller or entrepreneur who improved the technology, e.g. psychological appreciation and monetary support for many years. After the contract, entrepreneurs can make the technology open source. It will be easy with blockchain, as the same type of competitors will have the same coins, and some coins can be given to the entrepreneurs.
Note:
One can also make a profit, by assigning more employers with less wages. But this is even not possible because all consumers and producers know all prices of products and utilities each person would get from owning each product. So approximate wages can be easily computed and made public. A democratic autonomous organization that has more productive and skillful employees can make a win in this situation, so it creates positive reinforcement to develop skills.
How can we pay for things that we can't measure or are meant to be free?
Open source and open access resources
How to pay for the high-end Research and Development sector?
All high-end equipment and salary for the researcher can be paid through taxpayer money, but auditing system should be robust enough to hold them accountable.
How to pay for the education sector?
How to set the price?
Price is inverse of mean value obtained from the different organization for the number of units produced per unit time (days or months etc) per employee with collaboration and using time not more than 5 hours per day per employee + Raw material cost calculated by the same principle.
Price is inverse of mean value obtained from the different organization for the number of units produced per unit time (days or months etc) per employee with collaboration and using time not more than 5 hours per day per employee + Raw material cost calculated by the same principle.
Working hours to be as 5 hours per day or 30 hours per week in the Labor Law. Other time should be used in creativity and learning with daily chores.
How there will be a technological improvement if sellers are price takers?
Sellers can earn more by increasing their productivity and efficiency through technological improvement for example. More production in less time means more earning with the same price per unit. But if some entrepreneurs or researchers managed to do technological improvement, they have to hide the protocol in order to make the profits. This will create a disadvantage for society as a whole. So, competitors can provide incentives to the seller or entrepreneur who improved the technology, e.g. psychological appreciation and monetary support for many years. After the contract, entrepreneurs can make the technology open source. It will be easy with blockchain, as the same type of competitors will have the same coins, and some coins can be given to the entrepreneurs.
Note:
One can also make a profit, by assigning more employers with less wages. But this is even not possible because all consumers and producers know all prices of products and utilities each person would get from owning each product. So approximate wages can be easily computed and made public. A democratic autonomous organization that has more productive and skillful employees can make a win in this situation, so it creates positive reinforcement to develop skills.
How can we pay for things that we can't measure or are meant to be free?
Open source and open access resources
How to pay for the high-end Research and Development sector?
All high-end equipment and salary for the researcher can be paid through taxpayer money, but auditing system should be robust enough to hold them accountable.
How to pay for the education sector?
References:
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