Why is pure competition considered an unsustainable system? Price differentiation is often too minimal to matter. Few barriers exist to entry, meaning that the market inevitably floods. Consumers cannot distinguish between products. Producers cannot make a profit if they keep dropping their prices.
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When we say pure competition, this is what we see in the market wherein there are a lot of competitors or sellers who are competing because they are selling the same products or rendering the same services.
This kind of competition is also known as perfect competition, wherein what they do is that they propose competitive prices for their products and services.
What makes this kind of system unsustainable is that producers would have a hard time earning some profit if they keep on lowering their prices.
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