perfect competition


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Related to perfect competition: Monopolistic competition, oligopoly

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 ?
Competition" Means Only the Pure Version of Perfect Competition
Side by side with the view that the red world, properly understood, is pretty much like perfect competition, one can find analysis of competition in the real world as a rivalrous process.
Perfect competition theory contends that a competitive environment requires the existence of many small companies and firms.
The price taker assumption in perfect competition is unrealistic because every firm contributes to the total market supply and commands some influence on its output price.
15) This is a standard real business cycle model with perfect competition.
8) Assuming perfect competition, her firm faces an exogenous product price, P.
Any departure from perfect competition in the credit market, driven by factors both imputable at the structure rather than at bank level, introduces inefficiencies that would harms~ access to credit, thus impacting negatively on firms performance.
The book explores the nature of real competition as opposed to perfect competition and lays out the evidence found by economic historians questioning the authenticity of the "stylized facts" put forward by Nicholas Kaldor as canonical truths.
8220;As the holidays wind down we thought this would be the perfect competition to show off successful holiday dishes,” Stephanie McIntosh, International site manager stated.
In the aftermath of World War II, Hayek wrote that perfect competition was not the most optimum state of equilibrium in the economy.
Here's the perfect competition prize to keep the whole family entertained during the dark winter evenings.
41) Such "forcing," it is said, prevents rivals from offering purchasers similar products and therefore interferes with "competition on the merits" analogous to perfect competition.