9.3 Competition Maximizes Welfare
All is for the best in the best of all possible worlds.
—Voltaire (Candide)
Perfect competition serves as an ideal or benchmark for other industries. This benchmark is widely used by economists and widely misused by politicians.
Most U.S. politicians have at one point or another in their careers stated (with a hand over their heart), “I believe in the free market.” While I’m not about to bash free markets, I find this statement to be, at best, mysterious. What do the politicians mean by “believe in” and “free market?” Hopefully they realize that whether a free market is desirable is a scientific question rather than one of belief. Possibly, when they say they “believe in,” they are making some claim that free ...
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