Title: Perfect Competition Definition
Headings: Perfect Competition
Perfect Competition
What Is Perfect Competition?
Key Takeaways
Perfect Competition
How Perfect Competition Works
A Large and Homogeneous Market
Perfect Information Availability
Absence of controls
Cheap and Efficient Transportation
Examples of Perfect Competition
What Are the Disadvantages of Perfect Competition Models?
Do Firms Make Profits in a Perfectly Competitive Market?
Does Perfect Competition Exist in the Real World?
Barriers to Entry Prohibit Perfect Competition
Frequently Asked Questions
What is perfect competition?
What is an example of perfect competition?
What is the difference between perfect competition and imperfect competition?

Content: Perfect Competition Definition
Business Business Essentials
Perfect Competition
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Adam Hayes
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Peggy James is a CPA with 8 years of experience in corporate accounting and finance who currently works at a private university. Article Reviewed on April 10, 2021
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Margaret James
Updated Apr 10, 2021
What Is Perfect Competition? Pure or perfect competition is a theoretical market structure in which the following criteria are met: All firms sell an identical product (the product is a "commodity" or "homogeneous"). All firms are price takers (they cannot influence the market price of their product). Market share has no influence on prices. Buyers have complete or "perfect" information—in the past, present and future—about the product being sold and the prices charged by each firm. Resources for such a labor are perfectly mobile. Firms can enter or exit the market without cost. This can be contrasted with the more realistic imperfect competition, which exists whenever a market, hypothetical or real, violates the abstract tenets of neoclassical pure or perfect competition.