Different market systems exist that depends on the industry and the firms within the industry. It is essential for the business owners to understand the kind of the market they are operating in before they make price and output decision. In the case of a company that is owned by its workers and all the other features are the same as that of the perfectly competitive firm, the price and output decision will be the same as that of a competitive firm.
The reason for price similarity with that of the perfectly competitive firm is due to many buyers and sellers (Annenberg Learner " Films Media Group, 2016). With many participants in the market, it is difficult for one firm to change the price that is prevailing in the market. In case the owners of the firm attempt to alter the price, buyers have infinite alternatives to choose from. For this reason, it will make the firm to take price as determined by forces of demand and supply.
A firm in the perfect competition which is a price taker sell the units of its own at the current market price (Otaki, 2011). This means that the output production of the firm will depend on the willingness of the buyers to purchase the products. Therefore, the firm will only produce the output that the buyers are willing and ready to buy.
Conclusively, for this firm that is under the ownership of workers but meets all the features of the perfectly competitive firm, will be forced to operate in a perfectly competitive market. Therefore, the price and output decision will be the same as that of the perfect competitive firm.
References
Top of Form
Annenberg Learner (Firm), " Films Media Group, (2016). Perfect Competition " Inelastic Demand.Bottom of Form
Otaki, M. (2011). A pure theory of aggregate price determination. Theoretical Economics Letters, 1(03), 122.
