The competitive firm

This chapter examines market structure. Emphasis is placed on the four characteristics of perfect competition: (1) numerous buyers and sellers, (2) a homogeneous product, (3) freedom of entry and exit, and (4) perfect information. Special attention is given to the desirable property of firms in perfectly competitive industries—efficiency. The chapter uses timely and relevant examples from agriculture and agribusiness to describe strategies for perfectly competitive firms. Since competitive firms cannot influence the prices of the commodities they sell, their best strategy is to continuously attempt to lower production costs by being early adopters of new technologies.