Perfect market
The perfect market is a theoretical model of a homogeneous market in economics . This simplifying model is often used to investigate and understand complex relationships (such as pricing ).
In order to create this model, the influencing factors are deliberately restricted so that many influencing factors - contrary to economic reality - as eliminable variables do not influence the model.
definition
In the context of rational behavior and utility maximization , the perfect market describes a fictitious market that has the following characteristics:
- There are no preferences between providers and buyers on the following levels :
- personally (e.g. through advertising )
- time (opening times, transport and travel times)
- factual (service differences)
- spatial ( location advantages , point market )
- complete market transparency
- Homogeneity (standardized quality / equality) of the goods
- immediate reaction of all market participants to changes in market variables
- The objective of profit maximization must be followed.
If one or more of these assumptions do not apply to the market, one speaks of an imperfect market .
Often a perfect market is assumed to examine a process and only one of the points ( ceteris paribus clause ) is changed so that the effects on the market conditions can be clearly assigned and reference models can be obtained.
Perfect capital market
An important proponent of neoclassical finance theory is the perfect capital market. The perfect capital market is one of the basic assumptions for many models important in finance theory, such as the capital asset pricing model , the arbitrage pricing theory and the Modigliani-Miller theorem . It is based on further market-specific assumptions:
- identical debit and credit interest rates
- no transaction costs, funding limits or taxes
- Investment decisions have no impact on other market participants (no external effects).
Pricing on the perfect market
In a perfect market, there is no arbitrage opportunities, so that supply and demand at a common point, the market equilibrium meet. The equilibrium price is equal to the marginal cost . The providers in the perfect market make no profits. There is only one price at which demand equals supply and the market is cleared. Providers cannot enforce a price higher than the equilibrium price because they will not find any buyers due to market transparency . Buyers who want to pay less than the equilibrium price will not find any suppliers on the market. This realization was first formulated by William Stanley Jevons as the law of the indiscrimination of prices . Empirically, the price formation occurs faster the less the observed real existing market deviates from the ideal-typical model of the perfect market.
rating
In reality, this type of market cannot be found and is not postulated as an ideal to be striven for. The shares trade on the stock market and the foreign exchange market are considered to be markets that the perfect market the next. The real estate market is one that has a lot of imperfections.
Individual evidence
- ↑ Wolfgang Cezanne: Allgemeine Volkswirtschaftslehre, Oldenbourg, 2005, 10th edition, p. 156
- ↑ Arnold Heertje, Heinz-Dieter Wenzel: Fundamentals of Economics, Springer, Berlin, 2001, p. 132 ff.
- ↑ Wolfgang Cezanne: Allgemeine Volkswirtschaftslehre, Oldenbourg, 2005, 10th edition, p. 156
- ↑ Alfred Eugen Ott: Grundzüge der Preisheorie, Vandenhoeck & Ruprecht, Göttingen, 1979, 3rd edition, p. 32 ff.
- ^ Willi Albers, Anton Zottmann: Concise Dictionary of Economics (HdWW), Volume 5, Vandenhoeck & Ruprecht, Göttingen, 1980, p. 106
- ^ Alfred Stobbe: Mikroökonomik, Springer textbook, 1991, 2nd edition, p. 561
- ↑ 1871 in "The Theory of Political Economy"
- ^ Alfred E. Ott, Wirtschaftstheorie, Vandenhoeck & Ruprecht, Göttingen, 1989, p. 41