Canadian CANNAINVESTOR Magazine October 2017 - Page 121

A market or industry with “perfect competition” can be charted:

Already, we see the problem applying that graph, and what it represents, to the legal recreational cannabis industry because the consensus opinion is that there will be a supply shortage. The industry has barriers to entry and the consumer does not have access to all information at this time (provinces have not passed in to law minimum age for consumption or distribution networks etc). In fact, Bill C-45 itself has not yet passed into law. Intuitively, any deviation from any one or more of the five criteria that defines “perfect competition” leads to “imperfect competition”: “A market where information is not quickly disclosed to all participants in it and where the matching of buyers and sellers isn't immediate. Generally speaking, it is any market that does not adhere rigidly to perfect information flow and provide instantly available buyers and sellers”. Examples of imperfect competition include oligopoly, monopolistic competition, monopsony and oligopsony. In an oligopoly, there are many buyers for a product or service but only a few sellers. Government regulations and other barriers of entry can lead to an imperfect market.

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Retail Investor's Perspective