Saturday, October 20, 2012

Evolutionary trends in competitive economic markets

I haven't heard much talk about evolutionary trends in competitive economic markets. As a student of economics, I understand the reasoning behind the advantages of a competitive market, but producers and consumers are adaptive agents. There are constant profit incentives to both producers and consumers to find ways to take advantage of distortions in the market.

It seems to me that there are no forces within the competitive economic system to assure that the assumptions necessary to produce competition are alive and well. Seems like the social value of competitive markets will naturally decay over time as the agents adapt to fulfill their own self-interest, unless the competitive markets adapt, too. Isn't that one of the roles of government?

How do we manage the conflict of interest when producers and consumers are agents in government, too?

Just wondering wandering...