Question

Middlemen are unnecessary burden. This charge has been made by many over the time. Is this Likely to be the case in a competitive economic system? Why or why not?

Answer 1

Answer:
Middlemen are unnecessary burden, but this is not true in competitive economic system because of following reasons:

• In competitive economic system the available margin is very less, each supplier compete with each other to gain more market share by providing goods and services at cheaper rates. So room for middle man income is less or negligible.
• In competitive environment everyone want their product to be cheaper than their competition so they prefer to directly purchase it from the source.
• To increase the profit even after selling at lower margin in competitive economy suppliers sometime purchase bulk amount of goods and for that they directly go at source without middleman.

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