why is there no producer surplus in a competitve market?

Answer 1

In a competitive market, the presence of many competing firms selling identical products leads to a situation where producers do not have the ability to set prices higher than the market equilibrium price. As a result, producers are forced to sell their products at the market price determined by the intersection of supply and demand.

Because producers are unable to charge a price higher than the market equilibrium price, they are not able to generate any producer surplus. Producer surplus is the difference between the price at which a producer is willing to sell a product and the price at which they actually sell it. In a competitive market, this surplus is effectively eliminated, as producers are not able to charge above the market price.

Therefore, in a competitive market, all producers are competing for the same pool of consumers at a predetermined market price, and as a result, they do not have the ability to generate any producer surplus.