Title: Why Are There No Profits in a Perfectly Competitive Market?
Headings: Why Are There No Profits in a Perfectly Competitive Market?
Why Are There No Profits in a Perfectly Competitive Market?
Key Takeaways
Perfect Markets Achieve Allocative and Productive Efficiency
Distinction Between Normal Profits and Economic Profits

Content: A market that experiences perfect competition may be referred to as a "perfect" market by economists that subscribe to this school of thought. So, some economists use perfect competition as a benchmark to compare the performance of real markets. While some industries may exhibit certain characteristics of perfect competition, very few industries can be described as perfectly competitive because it is an abstract, theoretical model. In addition to perfect competition, the other types of market structures (all with varying degrees of competition) are monopoly, monopolistic competition, and oligopoly. Key Takeaways
In neoclassical economics, perfect competition is a theoretical market structure that produces the best possible economic outcomes for both consumers and society. In a perfectly competitive market, there are so many firms producing the same products that, in the long-run, none of the firms can attain enough power to influence the industry. In the long-run, all of the possible causes of economic profits are eventually assumed away in the model of perfect competition. In a perfectly competitive market, firms can only experience profits or losses in the short-run. In the long-run, profits and losses are eliminated because an infinite number of firms are producing infinitely-divisible, homogeneous products. Firms experience no barriers to entry, and all consumers have perfect information.