Free market, what kind of competition it establishes and is it efficient?Watch
I thought maybe perfect competition but apparently it can be monopoly, natural monopoly. But doesn't free market exclude that
Maybe not if you talk about the negative externalities i.e MSC>MPC thus
MSC>P hence not allocative efficient
Also can we talk about natural monopoly or does free market also exclude that
How about productive efficiency?
Whether, the price equilibrium in a free market, is efficient would be determined if it fulfills the definition of allocative and productive efficiency respectively.
Allocative efficiency- optimal distribution of goods and services, taking into account the consumer's preferences. (P=MC)
Productive efficiency- producing goods and services with the optimal combination of inputs to produce maximum output with minimum cost.