Throughout the last couple of weeks, we have been covering the abstract concept of pure competition. This concept is something that, unknowingly, we are part of in everyday life. According to the textbook, pure competition is a "market structure in which a very large number of firms sell a standardized product, into which entry is very easy, in which the individual seller has no control over the product price, and in which there is no nonprice competition (meaning product is identical); a market characterized by a very large number of buyers and sellers.
This type of market is applicable to many markets around us on a daily basis, however, it was a big part of many of our childhoods, in the markets of video games that involve trading, such as FIFA, Madden, or Counterstrike. Using FIFA as an example, players would attempt to trade to gather the best team they possibly could, and collecting in-game currency, or coins, at the same time. In this market, players could list up real-life athletes in the form of FIFA cards that other players could buy for a certain amount of coins. Any player could sell FIFA cards whenever they wanted and stop just as easily too, checking off the "easy entry" part of the definition. At the same time, the cards are all identical, meaning there is no reason besides price to buy one card or another, checking off the "no nonprice competition" (or standardized product). Finally, the seller has no control over the price they are selling at, as buyers will never buy too high for a certain card, and selling too low will result in a marginal loss, checking off the "no control over price" part of the definition. Using the definition of a pure competition market, we can see that video game trading markets are almost completely pure competition markets.
However, many of us cannot relate to playing games like FIFA for hours on end trying to build the best possible ultimate team, which makes it difficult to believe there are pure competition markets around us. Using the definition of pure competition discussed before, we can see that these types of markets are really all around us. For example, on YouTube, anyone can upload videos whenever (easy entry), the product is purely video content (standardized product), and the seller uploads videos to be seen only at the price of time (no control over price). Overall, there are many other markets like this all around us, such as agricultural products and the video game industry as discussed in class, that we should always be aware of so we have an understanding of the markets that we are a part of.
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Interesting post! I think that there are many examples of pure competition in video games that we play as children . Though these games mimic real life in some ways, for the most part, the real situations that these games portray often do not follow examples of pure competition. Using your FIFA example, it is clear that it isn't quite as easy to manage a soccer team in real life as in a video game. Clearly, it is not easy to enter the market, because you need to pay millions of dollars sometimes to own a team. Also, the players are not all equal in ability, so some are clearly worth others. However, the games we play often do mimic pure competition and are a great way to visualize pure competition while we are young.
ReplyDeleteI really like this post because you connect pure competition with an example many can relate to. You also make sure to end with the idea that a pure competition scenario is difficult, because as we have learned in class it is very hard to have pure competition. Many companies compete in an almost perfect competition market (like Google) but do not fit all the criteria required.
ReplyDeleteThis post was very engaging based on the fact that we are surrounded by pure competition markets, a point you brought up. I think your example of ultimate team in FIFA is a great way to support your post. The way you directly related aspects of the video game to certain parts of pure competition was a good way of supporting your argument. In addition to FIFA, other team building games such as Madden or NBA 2K have the same components of pure competition.
ReplyDeleteI think this post is very relatable to many teenagers while also being educational. It is really easy to relate something many people enjoy, in this case it is Video Games.
ReplyDeleteRelating pure competition to ultimate team in FIFA is a great way to use real life examples and making it educational. Although I don't play FIFA, I have shared similar experiences in Madden Ultimate Team, or MUT for short. Just like Brandon did with his Madden Monopoly post, it is really helpful to put a real life example that is very familiar to many to help educate others about economic concepts.