However, as more and more firms adopt the technology in the long run, the competitive benefit of using the new technology would become canceled out. In a perfectly competitive market, a new technology that reduces marginal production cost would enable and encourage firms to increase production in the short run. Still, changes in the technological resources available to one or more firms can significantly impact the entire market.
Also, a perfectly competitive market involves many customers, such that not one of these customers has significant power or influence to directly cause a major change in the conditions of the market.
In an ideal perfectly competitive market, there are many firms operating in the industry, such that not one of these firms has significant influence or power to directly cause a major shift in market conditions. Nonetheless, other firms eventually adjust and catch up and the market accommodates the new factors, including the new technology. The introduction of the new technology in only a single competing firm affects the firm’s performance compared to other companies in the market, at least in the short term. Market equilibrium adjusts according to the overall effects of newly introduced technologies. The introduction of new technologies can change market conditions and influence competition. A brand new technology introduced in a perfectly competitive market changes individual firms in the short term, and new equilibrium is achieved in the long term.
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