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Efficiency and Distribution in Perfect Competition Markets: An Analysis Based on the Marginal Productivity Theory

In: Proceedings of the 2025 10th International Conference on Financial Innovation and Economic Development (ICFIED 2025)

Author

Listed:
  • Sicong Pan

    (Harbin University of Commerce, Finance School)

  • Zihan Wang

    (Harbin University of Commerce, School of Economics)

  • Yunhan Wang

    (Harbin University of Commerce, School of Accounting)

  • Qingyang Guan

    (Harbin University of Commerce, Management School)

  • Zhenyan Zhao

    (Harbin University of Commerce, School of Economics)

  • Fangyuan Zhao

    (Harbin University of Commerce, College of Public Finance and Administration)

Abstract

This paper examines the efficiency and distribution in perfect competition markets through the lens of the Marginal Productivity Theory. It begins by outlining the theoretical framework of perfect competition and the foundational principles of the Marginal Productivity Theory. The study then highlighting the role of marginal productivity in determining factor rewards and overall market outcomes. The paper further applies the theory to derive key formulas and provides a detailed analysis of their implications. Empirical evidence and case studies are used to validate the theoretical findings. The paper also includes a comprehensive section on the visualization of market dynamics, presenting five key graphs that illustrate the core concepts discussed. Finally, the paper discusses the practical challenges to perfect competition and the implications of market failures on efficiency and distribution.

Suggested Citation

  • Sicong Pan & Zihan Wang & Yunhan Wang & Qingyang Guan & Zhenyan Zhao & Fangyuan Zhao, 2025. "Efficiency and Distribution in Perfect Competition Markets: An Analysis Based on the Marginal Productivity Theory," Advances in Economics, Business and Management Research, in: Maizaitulaidawati Md Husin & Tomoki Fujii & Xiaodong Lai & Azlina Binti Md Yassin (ed.), Proceedings of the 2025 10th International Conference on Financial Innovation and Economic Development (ICFIED 2025), pages 462-473, Springer.
    • Handle: RePEc:spr:advbcp:978-94-6463-702-1_49
    DOI: 10.2991/978-94-6463-702-1_49
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