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Asymmetric Information about Perfect Competition:
The Treatment of Perfect Information in Introductory Economics Textbooks

Scott A. Beaulier
Assistant Professor of Economics
Stetson School of Business and Economics
Mercer University
Macon, GA 31207
Phone: (478) 301-5596
beaulier_sa@mercer.edu
URL: www.scottbeaulier.com

Wm. Stewart Mounts, Jr.
Professor of Economics
Stetson School of Business and Economics
Mercer University
Macon, GA 31207
Phone: (478) 301-2837
mounts_ws@mercer.edu

September 2008

Acknowledgements: The authors thank David Prychitko for useful comments and suggestions. The standard disclaimer applies. Asymmetric Information about Perfect Competition:
The Treatment of Perfect Information in Introductory Economics Textbooks

Abstract

The theory of perfect competition is the most fundamental core topic of economics. Deviations from its underlying assumptions offer the format for the development of all other aspects of economic theory. For example, reducing the number of sellers and blocking entry initiates the discussion of monopoly, deadweight losses, rent-seeking behavior, etc. This first presupposes that the underlying assumptions are present in some manner. This, however, is not the case for the assumption of perfect information. In many instances this is not even mentioned. Yet, the relaxation of this assumption has led to many recent innovations in both micro and macroeconomics. This paper looks at how market-leading introductory economics textbooks treat perfect information within the theory of perfect competition. From this examination it is clear that many textbooks gloss over, or completely avoid, perfect information. This matters greatly as students need to see that the current state of affairs in all of economics is based on the full understanding of perfect competition and deviations from its assumptions. In a more general sense, this omission suggests that...