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 ?
Our focus is to compare the equilibrium outcome for perfect competition, a Cournot duopoly, and a Stackelberg duopoly, under a given performance-based policy.
Elaborating on perfect competition he said, 'As the Pakistani consumer moves from price awareness to brand awareness, it is important now more than ever to ensure that consumer welfare is not harmed either by deceptive marketing practices or the presence of counterfeits that capitalize on the hard work and resources of globally established brands.'
Mainstream economics eschews consideration of the logical difficulties of competitive equilibrium, such as the inconsistency between economies of scale and perfect competition as pointed out by Sraffa (1926), and shows little interest in seriously confronting the problems of inequality, unemployment and environmental degradation.
With the so-called marginal revolution in economics in the 1870s, and the introduction of a static theory of perfect competition, a new foundation was pursued by mainstream economists, one that from the outset rules out classes and exploitation, which was the core of the classical theory of income distribution.
South Africa's exceptionalism aside, the modus operandi of competition laws, in the North and South alike, is to structure markets built on the economic model of perfect competition to attain allocative efficiency.
Among other things, what is particularly interesting is that Rothbard constructed the chapter from the point of view of an individual firm and based on four concepts he later changed his mind about: the distinction between a free market competitive and monopoly price; the model of perfect competition and the price taker assumption for output prices; using the price taker assumption for input prices and the isoquant-isocost framework to derive factor demand curves; and using the isolated firm as a unit of analysis to understand optimal production and investment decisions.
The market works in perfect competition, but rail travel can never be competitive.
Today perfect competition in most sectors demand the most significant information be communicated with compactness.
On the other hand, Prince Abdullah bin Musaed bin Abdulaziz also expressed in a cable appreciation of Prince Ali bin Al Hussein for the efforts being exerted by him and his perfect competition in FIFA elections, wishing him success in future to achieve his personal ambitions and aspirations.
* Eduardo Azevedo and Daniel Gottlieb, University of Pennsylvania, "Perfect Competition in Markets with Adverse Selection"
However, prescribers' brand loyalty, pay-to-delay deals, the near-universal unpopularity of commodity generics and a lack of perfect competition in the pharmaceutical sector constitute key impediments to further generic expansion.
In contrast, macroeconomic models typically assume perfect competition. Is this disparity between facts and theoretical modeling quantitatively important?