- Some markets resemble perfect competition more than others. Agricultural markets, particularly up through the beginning of the 20th century, were viewed as being close to a real-world version of a perfectly competitive market.
- There were many farmers and many consumers. No farmer and no consumer individually constituted size able fractions of the market activity, and both groups acted as price takers. With a modest amount of capital, one could acquire land, equipment, and seed or breeding stock to begin farming.
- Although some farmers had better land and climate or were better suited for farming, the key information about how to farm was not impossible to learn.
- However, in recent decades circumstances have changed, even for farming, in a way that deviates from the assumptions of perfect competition. Now farmers are unlikely to sell directly to consumers. Instead, they sell to food processing companies, large distributors, or grocery store chains that are not small and often not price takers.
Many farming operations have changed from small, family-run businesses to large corporate enterprises. Even in markets where farming operations are still relatively small, the farmers form cooperatives that have market power.
The government takes an active role in the agriculture market with price supports and subsidies that alter farm production decisions.
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