In the idealized world of theoretical microeconomics, in a perfect competition scenario, identical atomistic producers are assumed to be producing identical fungible goods and compete with each other on price, conceptually leapfrogging the sale price downwards (sometimes in one straight jump) down to where price equals marginal cost (and also equals average cost) and individual producer and total excess profits equal zero. Conceptually in this model, it is just the competitive pressure between producers, coming from their own rational self-interest, combined with the perfect markets background structure, that operates as Adam Smith’s “hidden hand” in producing the most competitive pricing and production for consumers.Similarly in imperfectly competitive scenarios, from large to small oligopolies down to monopoly, the imperfect competitive pressure between producers, from game theory constraints and individual producer bargaining power produce a less effective hidden hand working for the consumer, but progressively more effective for producers, with progressively lower and lower market supply of products and higher and higher relative prices for consumers, up to a totally partitioned market where only those consumers with highest reservation price demand are supplied and charged their maximum reservation prices.However as this note asks, could there be a different and arguably more appropriate way of interpreting these same theoretical results which focuses instead on different degrees of altruistic cooperation between producers and consumers?Specifically, could the microeconomic perfect competition scenario be understood instead as perfectly altruistic cooperation between producers and consumers where the producer is able to give all available surplus to the consumer as pure consumer surplus, and each producer is able to supply their consumers at marginal cost pricing, on the basis that relevant background market conditions mean that the producer does not lose out by doing so. In fact it would otherwise be left with unsold stock.Similarly, could imperfect competition scenarios be understood as more imperfectly altruistic cooperation between producers and consumers where each producer is able to share out any available surplus together with the consumer split between producer and consumer surplus, and supply their consumers at pricing progressively above marginal cost pricing, but still less than maximum pricing, on the basis that relevant background market conditions mean that the producer does not lose out by doing so. In fact it could otherwise be left with unsold stock and less profit if it raised prices higher and with less profit and perhaps stock deficiency if it dropped prices lower.This alternative imperfect altruistic cooperation between producer and consumers framework, would arguably better reflect the real business customer-centric situation of most modern companies as understood and studied e.g. in business school case studies, where the day to day and strategic focus is typically both on satisfying and working with customers, and satisfying evolving customer wants, needs and orders, as well as providing enough return for shareholders, managers and employees, and company growth, while also keeping a weather eye open for competitors and the reality of production and labour market constraints and competition
