ABSTRACT
This chapter discusses the theory of perfect competition and demonstrates that perfect competition is an end result. It depicts the exhaustion of competition in a market that has is no innovative activity and firms 'compete' with homogeneous products. Once again it is shown that a common concern to many antitrust authorities is their fear of monopoly power and by extension cartelization, but that such fears may not be warranted. Monopoly power is very likely to be the result of some firms being more efficient than others in the Schumpeter-Littlechild sense. Accordingly, the accepted barriers to entry may not represent impediments to reaching perfect competition. On the contrary, they can be viewed as symptomatic of rivalry and necessary if in the long run perfect competition is to be attained. Monopoly is a market situation in which intra-industry competition has been defined away by identifying the firm as the industry.
