Are Farmers Markets An Example Of Perfect Competition?

Perfect competition is one of the four market structures (the others being monopoly, oligopoly and monopolistic competition). It has free entry, meaning nothing stops new firms from coming in, there are many competitors and all selling an identical product. This report from Jodi Helmer of NPR seems to show this.

See Why Are So Many Farmers Markets Failing? Because The Market Is Saturated. Excerpt:

"When the Nipomo Certified Farmers' Market started in 2005, shoppers were eager to purchase fresh fruits and vegetables, as well as pastured meats and eggs, directly from farmers in central California.

But the market was small — an average of 16 vendors set up tables every Sunday — making it harder for farmers to sell enough produce to make attending worthwhile.

"The market in Santa Maria is 7 miles in one direction [from Nipomo], and the market in Arroyo Grande is 7 miles in the other direction. Both are bigger markets, so shoppers often went to those markets instead," explains market manager and farmer Glenn Johnson.

The decision to host the market on Sundays also proved detrimental. Many of the farmers participated in six or more additional markets each week and wanted Sundays to rest, says Johnson.

In 2018, with attendance down and just five vendors signed on to sell produce, organizers of the Nipomo Certified Farmers' Market decided to shut down the event at the end of last season.

Nationwide, the number of farmers markets increased from 2,000 in 1994 to more than 8,600 in 2019, which led to a major problem: There are too few farmers to populate the market stalls and too few customers filling their canvas bags with fresh produce at each market. Reports of farmers markets closing have affected communities from Norco, Calif., to Reno, Nev., to Allouez, Wis.

Markets in big cities are hurting too. The Copley Square Farmers Market in Boston reported a 50 percent drop in attendance in 2017. In Oregon, where 62 new markets opened but 32 closed, the researchers of one multiyear study concluded, "The increasing popularity of the markets is in direct contrast with their surprisingly high failure rate."

Diane Eggert, executive director of the Farmers Market Federation of NY, received numerous reports of closings; she believes the problem is one of pure mathematics.

"There are way too many markets," she says. "The markets have started cannibalizing both customers and farmers from other markets to keep going."

Eggert also points to myriad other options that consumers have for accessing fresh foods, including community-supported agriculture and home delivery options from companies such as Amazon, Instacart or Blue Apron that might be more convenient than shopping at a Saturday morning market."