This document discusses perfect competition in the rice market. It describes that the rice market exhibits characteristics of perfect competition, including: (1) there being many small rice farming firms and buyers/sellers, (2) the rice product being standardized/homogeneous, and (3) easy entry and exit for firms in the market. The document also notes that international rice trade can demonstrate perfect competition when trade barriers are low, causing domestic rice prices to align with global prices.

1. GROUP MEMBERS
Vu Hoang Son
Le Phuong Nhi
Truong Phuong Quyen
Nguyen Minh Tan
Bui The Tan
Nguyen Khac Vinh

2. PERFECT
COMPETITION

3. WHAT IS PERFECT COMPETITION ?
A large number of small firms
A homogeneous product
Very easy entry into or exist from the
market
 Perfect competition is also referred to
as pure competition

4. FEATURES OF PERFECT COMPETITION
 There are large number of buyers and sellers
 No buyer or seller can influence the ruling
marker price by their own actions
 All buyers and sellers possess perfect
market information
 All units of commodity are homogeneous
 Firms are free to enter and leave the market
at any time

5. A PERFECTLY COMPETITIVE MARKET
A perfectly competitive market must
meet the following requirements
Both buyers and seller are price takers
The number of firm is large
There are no barriers to entry
The firm’s products are identical

6. BOTH BUYERS AND SELLERS ARE PRICE TAKER
 Price taker is a seller that has no control
over the price of the product it sells
 In most markets, households are price
takers they accept the price offered in
stores
 The retailer is not perfectly competitive
A retail store is not a price taker but a
price maker

7. THE NUMBER OF FIRM IS LARGE
 Large means that what one firm does has no
bearing on what other firms do
 Anyone firm’s output is minuscule when
compared with the total market

8. THERE ARE NO BARRIERS TO ENTRY
 Barriers to entry are social, political or
economic impediments that prevent
other firms from entering the market
 Barriers sometimes take the form of
patents granted to produce a certain
good
Technology may prevent some firms
from entering the market

9. THE FIRM’S PRODUCTS ARE IDENTICAL
 This requirement means that each firm’s
output is indistinguishable from any
competitor’s product

10. WHY RICE IS A PRODUCT OF PERFECT
COMPETITIVE MARKET ?
There are large number of small firms

11. WHY RICE IS A PRODUCT OF PERFECT
COMPETITIVE MARKET ?
 All firms produce a standardized or
homogeneous product

12. WHY RICE IS A PRODUCT OF PERFECT
COMPETITIVE MARKET ?
Easy entry


13. PERFECT COMPETITIVE IN WORLD MARKET
 When trade barriers are neglieable
 the price of domestic goods is
influenced by the world market price
 The prices of rice in Vietnam fell in 1999
 the supply of rice in the world
increased significantly

14. PERFECT COMPETITIVE IN WORLD MARKET
 The price of a commodity traded on the
world market will depend on its price in
other countries
” The Law of One Price”

15. THE LAW OF ONE PRICE
 The theory that the price of a given security,
commodity or asset will have the same price
when exchange rates are taken into
consideration

16. WHY DO WE NEED TO KEEP RICE PRICES
STABLE AND AFFORDABLE ?
 High concentration of exports coming from
only a few countries
 The international rice market is vulnerable to
disruptions in supply from major exporting
countries, leading to higher world price
 In the international rice trade, a relatively
small number of exporting countries must be
interact with a large number of importing
countries

17. WHAT CAUSES FOR RICE PRICE TO RISE?
 Supply going short
+ the decreasing trend in growth yield is due to
insufficient public investment in agricultural
research
+ contributed to poverty reduction directly
through increased income for rice farmers
+ indirectly through lower prices of rice due to
the steady supply brought about and the
overall increase in global rice production

18. WHAT CAUSES FOR RICE PRICE TO RISE?
Demand increases
+ Economic growth in large countries
such as India and China has increased
the demand for cereals livestock
consumption
+ Africa has been importing rice
accounting to one third of the total world
trade