# Perfect Pedagogy

When you were taught about perfect competition, what was the underlying interpretation of the model?

1. The model is a good approximation: Markets in the real world work about as well – and in roughly the same way – as the perfectly competitive model says. Regulation is therefore generally counter-productive.

2. The model is a foil: Markets only work well if the model’s numerous extreme assumptions hold, so markets in the real world are at best so-so. Regulation is therefore generally beneficial, or even necessary.

3. The model is a special case: Markets work well when its assumptions hold, but the various forms of “imperfect” competition work well when the perfectly competitive assumptions are violated. Regulation – including regulation to make actual markets better match the perfectly competitive assumptions – is therefore generally counter-productive.

Take lectures, assigned readings, and homework into account when you answer. Please state the *best* of these three response options in the *first *sentence of your comment before elaborating or proposing alternative interpretations.

Bonus: If you’ve ever *taught* the perfectly competitive model, what underlying interpretation did you convey to your students?

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