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: 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. In this messy, imperfect form of competition, you may get high profit margins, but the price to the consumer can fall much lower, because firms can find ways to lower the cost of production using new technology, economies of scale, new production techniques, and the reduction of waste to increase productive efficiency. Under so-called perfect competition, the limit of price reduction enjoyed by the consumer is the cost of production. The price can fall so far, and no farther. Under real-world competition, with economies of scale, unlimited capital investment, and new technology, the cost of production can fall, and the only limit is zero. Everything has some cost of production, so the cost can approach zero, though not reach it.