atomistic competition


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Atomistic Competition

A situation in which perfect competition exists because of the existence of many small companies. Because there are so many companies, no one is able to dominate the market or set prices. This results in low profits but also low cost for clients or consumers. Many believe atomistic competition to be ideal, though it rarely exists in practice.

atomistic competition

see PERFECT COMPETITION.
References in periodicals archive ?
4) It also implies accepting another of Schumpeter's prescripts: that sometimes one large firm is best, when that firm can produce most cheaply (and, as Schumpeter noted, internalize the benefits of research and other ideas, which have free rider problems and will be underproduced in Adam Smith's world of pinmakers) (5) To put it otherwise, atomistic competition may not be as efficient as other market structures.
It would seem more appropriate to attempt to list the conditions under which no price discrimination occurs: perfectly open markets, perfect information about prices on the part of consumers, no transactions costs, and a constant-cost industry structure--that is, precisely the conditions required for perfect or atomistic competition.
Katz (2004, 19) argues that this price threshold was implemented in the past by public policies that sought atomistic competition (For example the Robinson Patman Act 1936 in the United States), but that such an approach is anachronistic.