Perfect Competition (redirected from Perfectly competitive)

Perfect Competition

A market structure in which the following five criteria are met:

1. All firms sell an identical product.
2. All firms are price takers.
3. All firms have a relatively small market share.
4. Buyers know the nature of the product being sold and the prices
charged by each firm.
5. The industry is characterized by freedom of entry and exit.

Sometimes referred to as "pure competition".

Notes:

Perfect competition is a theoretical market structure. It is primarily used as a benchmark against which other market structures are compared. The industry that best reflects perfect competition in real life is agriculture.

See also: Dog Eat Dog, Economics, HHI, Monopoly, Oligopoly, Price Taker

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Perfect competition

An idealized market environment in which every market participant is too small to affect the market price by acting on its own.