Those who say that a perfectly competitive market (PCM) doesn’t exist, or cannot exist, have never been to Hong Kong. In Hong Kong, there are two perfect pieces of evidence of the PCM. The first of which is Stanley Market. Stanley Market is a row of small shops and stalls on Stanley Street. One can buy almost anything from these shops: food, clothing, gifts, books, etc. It’s an amazing place. For about $10 US dollars ($70 Hong Kong), I got 4 silk ties and 5 presents.
The next example of the PCM is the Ladies’ Market. The Ladies’ Market in Hong Kong is similar to Stanley Market, but much larger in size: it takes up 4 city blocks, as opposed to one street. Also, Stanley Market is much more touristy; the Ladies’ Market is used mainly by Hong Kong residents. You can buy anything from the Ladies’ Market including what is probably the cheapest iPad I’ve ever seen: just over $100 USD (sorry Tanya and James!). We spent about an hour at the Ladies’ Market and didn’t see half of it!
Now, there are 4 main requirements for a PCM:
1) Homogeneous products (all products are more or less the same)
2) Many buyers and sellers so that no one can control the price
3) Perfect information about the products sold
4) No barriers to entry or exiting the market
It would take me an entire paper to prove these conditions in Hong Kong (which I will be doing; spoiler alert, Dr Enz). However, I will briefly summarize my evidence:
1) Everyone more or less sells the same products: the fruit is the same from stand to stand, the clothing is the same, gifts, ties, etc.
2) No one seller can control the price. If he sets it higher than normal, no one will shop at him. Likewise, the buyer can bargin some for a lower price, but the seller can (and will) refuse a sale if the price is too low. He can sell to many others! The highest discount I got in either of the markets was about 5%. Peter got about 15%, but that was rare
3) The Hong Kong government guarantees that each and every product sold in the market carrying a brand name is authentic.
4) I enquired about any licenses needed to establish a stall. No. However, there is one barrier: in both markets, one does need to pay rent for his stall.
However, all this happened in the middle of our day. Let me return to the start.
We began the day at Victoria Peak. Victoria Peak overlooks all of Hong Kong and the bay. Unfortunately, he had such thick fog, we wouldn’t see anything L
After the peak was Stanley Market (see above). Then came a fun part: the Hong Kong Stock Exchange! We had a quick little tour of the Exchange, saw how trading is done, an example of the computers the traders use and even got to ring the bell. It wasn’t the bell of the Exchange, but still. Lots of pictures are coming from this as soon as possible!
Then was the Ladies’ Market.
Finally, after returning to the hotel for a quick shower and shave, Profs. Rogers, Rahman, Soriano, Shaw (from Dean College), Mr. Rogers and I all went to a really nice Australian steakhouse for dinner, the Wooloo-mooloo. After eating Chinese food for so long, that was by far the best damn steak any of us have ever eaten (sorry Dad!).
My next post promises to be an amazing one: Lantau Island: the home of the largest Buddha in the world.
Jonathan M. Murphy
Framingham State University
MetroWest Economic Research Center