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: Strengths & Weaknesses of Pure Competition in Economics | Small Business - Chron.com
Strengths & Weaknesses of Pure Competition in Economics
Small Business
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Finances & Taxes
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Economics
By Gregory Hamel
A solid understanding of economics and finance can give small-business owners a leg up in managing their companies. Competition between different firms is a major topic in economics that is also of utmost important to small businesses. Pure competition is an economic theory that attempts to describe how certain competitive markets function. What is Pure Competition? Pure competition, also called perfect competition, is an economic situation where a market has many sellers, none of which has a significant amount of market power. In perfect competition, goods are homogeneous, meaning the goods of one producer are exactly the same as the goods provided by another producer, and there are no barriers to entry or exit, meaning new firms can enter the market easily. The net effect of these factors is that under perfect competition, individual firms have no power to influence prices; the market determines prices. Strengths of Pure Competition Theory
The theory of pure competition provides a useful framework for thinking about how to operate a company in a market with many suppliers that provide homogeneous products. The theory also makes intuitive sense: