What are five instances when market competition does not work to lower prices?
The effectiveness of market competition, as understood according to classical liberal economics, is always dependent on the circumstances in which a given business has to operate. The purely liberal economy as envisaged by Adam Smith and David Ricardo is a competitive market that encourages competition. When Smith argued that every man uses his capital in every way possible in order to promote his own personal welfare, he suggested that this would allow an expansion of the market, a furthering of the division of labor, and an increase in the number and variety of products available to consumers. Social equality would come about when a sort of equilibrium was reached between all of these different market forces.
When businesses compete in a way that directly undermines this kind of market equilibrium, we can say that competition will not work to lower prices. A good example of...
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