Most time, the perfectly competitive firms are not price takers when there is barriers to exit that force firms to sell at the market price.
What is a perfectly competitive firms?
This refers to a price taker that is, it must accept the equilibrium price at which it sells goods.
Most perfectly competitive firms are price takers when:
- each firm is quite small relative to the total market supply.
- buyers and sellers have all the necessary information about prices, etc.
- the product is homogeneous.
Therefore, the perfectly competitive firms are not price takers when there is barriers to exit that force firms to sell at the market price.
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