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Polypol

In addition to the monopoly and the oligopoly, the polypole represents one of the three typical market forms in economics Examples there for like that Pricing comes about in Polypol and what happens to the complete competition is all about, we explain all of this to you here.

Is there really no other way to understand all of this? But of course! Just take a look at our Video to the Polypol on and in no time you have understood everything!

Polypol definition

As a polypole is a Market form referred to in the many providers on the one hand,many inquirers on the other side of the market opposite and in competition to stand by each other. Due to complete competition, in a perfect market it is not a market participant but the market mechanism that determines the price.

Polypol example

A very typical example of a polypole is the Stock market. Thousands of suppliers meet thousands of buyers here and are well informed thanks to modern information systems. The market is incredibly adaptable within a very short time (infinitely fast reaction speed).

But many examples of polypoles can also be found in everyday life:

For example with Buying fruit and vegetables At the weekly market, many customers (buyers) have the opportunity to choose between many different providers.

Further examples are:

  • labour market
  • Used car market
  • E-Bay (classified ads)
  • Housing market

Complete competition / Complete competition

The market share of the individual market participants in Polypol is very small. Thus prevails in the Polypol, in contrast to the monopoly, a lively competition between many suppliers and many buyers without one supplier or buyer being in a position of power over the other market participants.

With a polypole in one perfect market one speaks of perfect competition or of complete competition. Here are Consumer surplus and producer surplus evenly distributed. In the case of an imperfect market, on the other hand, it may or may not be incomplete competitionmonopoly competition prevails.

To create a perfect polypole, a few conditions must be met:

  • Must be in the market complete transparency to rule. This means that all market participants, suppliers and buyers are informed about the prices and quantities offered. This state of affairs is given in more and more markets thanks to modern information technology.
  • The good or service offered must be homogeneous be. That means the products / services do not differ from the different providers.
  • The price for the good or the service is always uniformly. There are no different prices for the same product.
  • All inquirers have at all times free market entry.
  • The price changes can and will infinitely fast responds.

But this ideal state of a polyp is not always given. If a condition is not met, one speaks of imperfect polypole. The effects and mechanisms of Polypol are then in a weakened form.

Polypol - The best possible market form?

The Polypol is often referred to as the “normal case of the German market” or the “best possible market form of the market economy”. However, this statement must be viewed in a differentiated manner. There is a high degree of competition in Polypol. In this way the market brings itself into the desired equilibrium through market forces. From the consumer's point of view, the Polypol is actually the one for price and product range "Best market". But in many cases it is also a "hard market" that works best without restrictions such as minimum wages, maximum prices and subsidies. The Polypol must therefore also be viewed critically from a social point of view.

monopoly

In some areas, however, a monopoly can also make more sense for economic reasons. One speaks here of the natural monopoly. If you want to learn more about the monopoly, check out ours Contribution to do this!

Oligopoly

An oligopoly can also appear advantageous over the polypole. If many small companies come together, this can potentially create completely new opportunities for development and research and the associated new innovations. Do you want to know more about oligopolies? Check out ours Contribution to do this!

Pricing Polypol

The market share of the individual market participants in Polypol is very small. So providers and buyers do not have much influence on the Market price.

For the provider, a change in price by a single provider does not mean that the other providers also change their prices. On the contrary: if the price increases, customers migrate to other providers with still lower prices Price drop there is a risk that the provider can no longer meet the increasing demand. Under polypolitical market conditions, the providers can only act as Prize takers and Volume adjusters act.

But even the buyer does not have the appropriate bargaining power to influence the market price. He only has the option of choosing the provider who offers the good or service in question at the lowest price. He does not have the power to change the price any further. Because if the customer tries to keep the price down, the provider decides against the sale due to the many other customers. In the case of perfect competition, the customer only has the option of Prize taker and quantity adjusters in the market to act.

Neither supplier nor customer have due to their low production volume or purchase and thus low market share the possibility of influencing the market price in their favor.

Thus, all suppliers are forced to produce efficiently and it makes no sense for consumers to hold back their demand in order to lower prices. They consume exactly as many goods as they need. One speaks here of perfect optimumin which macroeconomic welfare is maximized.