Analysis of Perfect Competition and its Impact on Market Dynamics

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Final Project Report
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Introduction
The assessment report elaborates and examines in-depth understanding on the aspects of the
perfect competition and its relativity with aspects of the market forces that is demand and supply.
The overall report provides for the useful and valuable aspects relate to the perfect competition
and the earning management so as to enable the economists to make better and valuable decision
with respect to the forthcoming activities enabling the business concern in the attainment of the
suitable growth and development.
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Article 1
As per the words of Kordestani & Mohammadi (2016), one of the major and prominent factors
contributing to earning management is product market competition. With the aid of the
concerned article the manager are persuaded to manipulate the earning of the firm for the reason
of the grasping of the opportunities. Further provided, the author embarks that the intense level
of competition in product market forces (Demand and Supply) ensures the manager to
manipulate corporate earning in order to reduce the pressure of the financial risk. The author
elaborates that with such aspect the company concern can attain a better and elaborated position
in terms of the dealing o the competitors. Further provided, this will assist the company in the
attainment of the better and enlarge share in the market arena. In other words, the concerned
article overall elaborates on the significant relationship between intense level of competition
prevailing in the market and the earning management. However in this regard the author
elaborates three major dimensions for the measurement of the high level of competition that
predominately include size of the market cost of the entry and centralization.
In addition the author addresses on the fact that with the suitable development in the economic
terms there are numerous matters of discussions with respect to the structure of the market in
which the producers are active. One of the prominent aspects in this regard is related with the
appropriate medium of competition between the economic terms and facts. The author further
elaborates that introduction of the competition in the market and the business activities are
known as cure for inefficiency. In the wide scenario, where globalization is one of the major
increasing trend where competitiveness is the prominent subject matter among the policy
makers, industries and firms all over the world. As such the author recommends that the
authority concern must focus on the market forces (Demand and Supply) so as to achieve
desirable economic growth and sustainable development.
However in this regard the author in addition further embarks on the fact the despite of the series
of the benefits related to the competitiveness recent information provides that the product market
competition increases the likelihood of risk and duplicitous behavior of firm managers. As such,
the article concludes that there is an effective integration impact of the competition and the
unethical behavior of the managers. The author thus embarks on the need to understand the
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market terms so as to have proper command on the earning management. The author with the aid
and support of the concerned article will assist the varied parties associated with the business in
the effective decision making with respect to the accounting information and the varied aspect
related to the market forces and the perfect competition.
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Article 2
As per the views of Makowski & O story (2012), competition is one of the major aspect of
economics but its idealization and conceptualization as per perfect competition underlies much
of the traditional analysis. As such the author recommends that the proper and suitable effort are
required to be made by the economists to preserve the centrality associated with the terms of the
perfect competition and the market forces (demand and supply) along with the series of the
challenges so as to have better decision making with respect to the current as well as future
period. Another aspect of prime importance that the author elaborates is that development of the
perfect competition and the general equilibrium theory are highly associated or linked. However
the author as per the past findings explains on the aspect that how perfect competition has
assimilated its current formulation with the set presumptions or assumptions. Indeed the author
provides for the reformulation of the model that serves or provides a gateway to reexamine the
exact meaning of the perfect competition. In other words, it can be determined that the perfect
competitors will ensure the formulation of the strategic approaches in order to gain the maximum
benefits.
In addition, the author elaborate that two notable features related to the reformulation of the
aspects related to the reformulation primarily and predominantly include that prices are not
exogenously given rather they are obtained from bargaining. Secondly, the set of the active
markets is not exogenously given. Rather, they are obtained from the aspects of innovation. As
such the author in this aspect concludes that the perfect competitors of the reformulation of the
competition are neither a passive price taker nor a passive market taker.
Further provided, the author embarks and elaborates on the fact the competitive market
environment is also characterized by the widely and broad level of information. As such the
authority concern or the economists must ensure a proper and suitable focus on such information
so as to underst6and the dynamics associated with the factors of demand and supply.
In addition, in this regard that the author highlights that in the process of reformulation achieving
efficiency both easier and harder than in the standard models.
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Conclusion
The overall report concludes on the need to understand the perfect competition and its integration
with the market forces (demand and supply). This will lead to the better conformation of the
economists with the market terms so as to have better decision making leading to the attainment
of the suitable and strong position in the market arena both at national and international level.
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References
 Makow ski , L., & O st roy, J. M., (2012). Perfect Competition and the Creativity of the
Market. Journal of Economic Literature.
 Kordestani, G. R., & Mohammadi, M. R., (2016). A Study of the Relationship between Product
Market Competition and Earnings Management. Procedia Economics and Finance.
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