Perfect (pure) competition

Definition

Perfect competition is a market structure where many firms offer identical products, and no single seller can influence the market price or product quality. In this environment, all firms are price takers, and markets are characterized by free entry and exit.

Related terms

Market Structure:

The organization and characteristics of a market that influence the behavior and interaction between buyers and sellers.

Price Taker: A firm or individual who must accept the prevailing prices in the market of their products because they do not have enough power to influence it.

Free Entry and Exit: A condition in which firms can freely enter into or exit from a market without facing significant barriers, characteristic of perfectly competitive markets.