Government Policy and Perfect Competition

How efficient the economy is operating largely depends on the level of the competition in the market. Level of competition in economic theory is divided into three different categories, named the perfect competition, monopolistic competition, oligopoly and monopoly. Barriers of entry is one of the key points to distinguish the difference between the levels, thus it is, to a certain extent, the authorities' main task to keep the entry barriers low, where the market can operate efficiently, but it does not mean the monopolistic market structure is always inefficient. …