How are the critical assumptions of the resource-based model of a firm fundamentally different from the way in which a firm is viewed in the perfectly competitive industry structure?

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Business

Ahmad Pope

19 August, 05:16

How are the critical assumptions of the resource-based model of a firm fundamentally different from the way in which a firm is viewed in the perfectly competitive industry structure?

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Julius Richardson · Answer 1

In perfect competition, all firms have access to the same capabilities, whereas in the resource-based model, resource differences exist between firms in the same industry.

Explanation:

This means that the law of supply and demand wouldn't be applicable in a perfect competition.

In other types of economic competition, Resources will be allocated to the group that are able to create the best product or services that are loved by the marker or to group who are able to market their products or services in a more efficient way.

In a perfect competition, noone have the better products or services. All of them have the same quality. So the allocation of resources will occurs randomly among the producers.