Lesson 7

The U.S. Bicycle Industry

A Case in Perfect Competition

And How Independent Retailers Can Thrive!

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perfect-competition.mp3

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I had an epiphany, as in a sudden insight into reality, in May at a meeting where a long time friend in the industry offered the opinion that the U.S. bicycle industry is in a classic state of perfect competition.  My immediate response was “…that sounds like a good thing!”  My friend, who went back to graduate school after working in a bike shop, for a major component manufacturer and prominent bicycle brand quickly responded with “…no, you don’t understand.”  He went on to explain that when he studied economics in graduate school he became aware of perfect competition which is a term of art in economics for the most competitive market imaginable – one where the companies and businesses realize the bare minimum profit necessary to keep them in business.