Perfect competition can be defined as a market structure in which competition is at its possibly greatest level. The perfect competitive market has all of the given factors to determine the existence of perfect competition:
The main points to be considered regarding the cold medication, we will consider the three factors such as the large number of buyers and sellers in the cold medication market, production of homogenous drugs for the treatment of cold and there is no advertising cost for the cold medications.
Surfing on the internet, a plenty of cold medication available in Australia over the counter (OTC) has been found such as Vicks Vapo Steam, Strepsils, Bosisto’s Eucalyptus Inhalant, Fess Nasal Gel, Lemsip cold & flu liquid tablets, Zorivax antiviral cold sore, etc. As medical cannot come up with a proper treatment for cold and flu, there are number of remedies to fight for the virus. There are some of the companies’ producing the wide range of suitable medications for the cold viruses, respective of the nature of the disease and age of the patients. Such as Blackmores, Senegar and Brauer are especially designed for young children to fight severe cold, while Vicks and Strepsils are widely used for chest congestion and sore throats for adults.
The top companies that are actively producing the medications for cold and flu are Procter and Gamble, the manufacturer of Vicks and Reckitt Benckiser, the manufacturer of Strepsils. However, there are a number of buyers and seller of the cold medication industry, but the production of products is heterogeneous instead of homogenous as the characteristic of perfect competition. Finally there is a need of advertising irrespective of the characteristics of perfect competition to have no or least advertising cost. Moreover, the companies are enjoying supernormal profits as pharmaceutical industries are enjoying high profits because of intense competition and inelastic demand. This kind of market lies in the categories of oligopoly competition:
- Differentiated products
- Barriers to entry
- Interdependence in decision-making
- Perfect knowledge