Title: What is the difference between pure and perfect competition? - Quora
Headings: What is the difference between pure and perfect competition?
What is the difference between pure and perfect competition?
Content: resources such a labor are perfectly mobile; and firms can enter or exit the market without cost." In order to meet these criteria, there have to be a very large number of firms, all have the same cost of production, and nobody should be able to differentiate their product. Because there have to be a large number of firms in any industry, economies of scale are not allowed. This limits competition to simply price competition, with all of these numerous firms competing to see which can shave their profit margin the thinnest, selling their product for the smallest increment above the cost of production possible. The big problem with this is that it puts a limit on how low an industry can reduce prices to the consumer. Reducing the cost of production is not allowed. Under real world competition, there may be barriers to entry involving high initial capital costs, imperfect information, and even a very small number of firms. There might even be only one, if that proves to be efficient, without it actually being a monopoly. Advocates of this kind of competition define monopoly in terms of what kinds of barriers there are, if they are based on government coercion or not.