perfect competition

(redirected from Atomistic Competition)
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perfect competition

(ECONOMICS) the IDEAL-TYPE concept of a ‘free market’ in which:
  1. there exist many buyers and many sellers;
  2. units of the commodity are homogeneous;
  3. where any one buyer's purchases do not significantly alter the market price. In addition, the assumption is also made that buyers and sellers possess full information, that there is freedom of entry to the market for new producers. who are able to sell on the same terms as existing producers. The further implication is that no producer is in a position to make ‘excess profits’. Thus perfect competition is often equated with maximum economic efficiency Equally, however, it must not be ignored that the model is an ideal-type one. Thus, although real world conditions will sometimes be found which approximate to the ideal type, often they do not (see MONOPOLY). And there can be no assumption that the achievement of‘free market’ conditions will always produce optimum, efficient and ‘fair’ outcomes for all parties concerned (compare CAPITALIST LABOUR CONTRACT, UNEQUAL EXCHANGE).
References in periodicals archive ?
He began in the Smithian world of atomistic competition, it nearly mined him, and he discovered a better way.
Katz (2004, 19) argues that this price threshold was implemented in the past by public policies that sought atomistic competition (For example the Robinson Patman Act 1936 in the United States), but that such an approach is anachronistic.
The so-called Keynesian revolution which transformed macroeconomic theory in the 1930s was largely untouched by these advances in the theory of markets, continuing to rely on the time-honored assumption of atomistic competition.