Perfect competition
Definition
A theoretical market structure in which many small firms sell identical products, no single buyer or seller can influence the market price, and firms can freely enter or exit the market. While rare in its pure form, it serves as a benchmark for evaluating real-world markets.
Examples
- Agricultural markets where many farmers sell identical commodities like wheat or corn
- Stock exchanges where many buyers and sellers trade identical shares at market prices
- Online marketplaces for standardized commodities where price is the only differentiator
Study This Concept
Practice perfect competition with free review games in these units: