Title: Strengths & Weaknesses of Pure Competition in Economics | Small Business - Chron.com
Headings: Strengths & Weaknesses of Pure Competition in Economics
Strengths & Weaknesses of Pure Competition in Economics
What is Pure Competition?
Strengths of Pure Competition Theory
Weaknesses of Pure Competition Theory
Considerations

Content: If one company charges more for a homogeneous product than another, customers will avoid the company with the higher price. For example, if there are two gas stations on the same corner and one charges 10 cents more per gallon, customer will likely avoid the more expensive station completely because gasoline is a homogeneous product. Weaknesses of Pure Competition Theory
The main weakness of pure competition theory is that perfect competition does not exist in reality. In addition to having many comparable sellers, many comparable buyers, and a homogeneous product, a market must have perfect information to be perfectly competitive. Perfect information means consumers are aware of any differences in quality and prices between producers. In reality, consumers do not have perfect information about prices, and most markets have at least some barriers to entry, and some differentiation between products. Considerations
Pure competition allows for some analysis of markets that exhibit many of the characteristics necessary for perfect competition to work, but in the end, it is just a theory. Small businesses often focus on niche markets with few competitors, and on releasing unique products and services that are different from those offered by competitors, both of which are counter to perfect competition. ‒‒:‒‒
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References
Boise State: Pure Competition
Cliffs Notes: