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Chapter 10 THE FIRM AND THE INDUSTRY UNDER PERFECT …
Chapter 10 THE FIRM AND THE INDUSTRY UNDER PERFECT …

... Copyright © 2003 South-Western/Thomson Learning. All rights reserved. ...
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Microeconomics - Testbank 1 (Hubbard/O`Brien)

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Perfect competition

In economic theory, perfect competition (sometimes called pure competition) describes markets such that no participants are large enough to have the market power to set the price of a homogeneous product. Because the conditions for perfect competition are strict, there are few if any perfectly competitive markets. Still, buyers and sellers in some auction-type markets, say for commodities or some financial assets, may approximate the concept. As a Pareto efficient allocation of economic resources, perfect competition serves as a natural benchmark against which to contrast other market structures.
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