Functioning of Perfect Competition
In a perfect competition model, no single company has a monopoly. The main features of this type of structure are as follows:
- All companies sell and provide similar products and services.
- Companies cannot influence the market value of their products.
- The market share of companies does not affect prices.
- Buyers have accurate information (past, present and future) about the product being sold and the prices charged by each company.
- There is complete mobility between capital resources and labour.
- Competing firms can enter or exit the market at no charge.
It can be compared to true imperfect competition, which exists when a market, hypothetical or real, violates the abstract principles of pure or perfect innovative competition.
Since all real markets exist outside the plane of the perfect competition model, each can be classified as imperfect. The contemporary theory of imperfect versus perfect competition stems from the post-Cambridge tradition of classical economic thought.
Perfect Competition : Functions, Features and Examples
In all competitive exams, the general studies section is a nightmare for all aspirants. Economics is one of the sub-topic of general studies. Here we will discuss “Various forms of markets – Perfect Competition”. This article will surely help one to understand the concept and give one an edge over other aspirants.