Title: Perfect Competition: Meaning, Assumptions and Other Details
Headings: Perfect Competition: Meaning, Assumptions and Other Details
Perfect Competition: Meaning, Assumptions and Other Details
Perfect Competition: Meaning, Assumptions and Other Details!
Definitions:
Assumptions:
A perfectly competitive market has following assumptions:
1. Large Number of Buyers and Sellers:
2. Homogeneous Products:
3. No Discrimination:
4. Perfect Knowledge:
5. Free Entry or Exit of Firms:
6. Perfect Mobility:
7. Profit Maximization:
8. No Selling Cost:
9. No Transport Costs:
Pure and Perfect Competition:
According to Prof. Chamberlin pure competition includes:

Content: (v) Lack of selling cost, and
(vi) Lack of transport costs. Prof. R.A. Bilas also distinguished Perfect and Pure Competition as, “Perfect Competition implies pure competition but also considers other characteristics. Pure competition implies one degree of perfection-the complete absence of monopoly. Generally, perfect competition will introduce the notion of perfect resource mobility and perfect knowledge.” Similarly, Prof. Baumol defined pure competition as an industry. It is said to be operating under pure competition when there are many firms, homogeneity of products, freedom of entry & exit, independent decision making.” On the basis of these definitions, it can be said that pure competition is said to exist when element of monopoly is absent from the market. The Perfect Competition is a broader term than pure competition which involves absence of monopoly as well as perfection in many other respects, such as, perfect mobility of factors of production and perfect knowledge of the market. Therefore, producers have a perfect knowledge of the quantity and quality of available factors of production as well as the prices which can be charged for its product. Thus, the distinction between pure and perfect competition is merely of degree, while every assumption of pure competition is also an assumption of perfect competition The concept of a perfectly competitive system includes one further assumption, viz.,