1.
Dr K.Sunanda
Associate Professor
MBA
PERFECT COMPETITION
MARKET

2.
What is perfect competition?
 Perfect competition is the simplest model of a
market structure in which all firms in a market
are price takers and in which there is no
restriction on the entry and exist from the
market. The market with perfect competition
atmosphere is known as perfect competition

3.
DEFINITION
 . Perfect competition is a unique form of the marketplace that
allows multiple companies to sell the same product or service.
Many consumers are looking to purchase those products. None of
these firms can set a price for the product or service they are selling
without losing business to other

4.
EXAMPLE

5.
Features of perfect competition
 Large number of similar buyers and sellers
Under perfect competition, there are a large
number of buyers and sellers. The number of
buyers and sellers are so large that the share
of each seller in the total supply and the share
of each buyer in the total demand is very small
and none of them can affect the total supply
and total demand by changing their supply and
demand respectively.

6.
 No Entry and Exit Barriers -
Under perfect competition, there exists no barriers for the entry of a
new firm and exit of a firm.
 Have Perfect Knowledge
All the buyers and sellers under a perfect competition situation have
perfect knowledge about the market conditions. Both buyers and sellers are
fully aware of the product, its availability, price etc
 No Publicity and Propaganda are required
As all the buyers and sellers of a perfectly competitive market have perfect
knowledge about the product and its attributes, publicity and propaganda
regarding the sale of the products is nota required.

7.
 No Transport Cost
Perfect competition is based on the assumption that there exists no
transportation cost. Due to this the goods/commodities are available at same
prices in all places in a perfectly competitive market
 Absence of Government Intervention
In a perfectly competitive market, government does not interfere the
working of the market. There exists neither licensing nor legal issues during the
entry of new firms into the industry. Government does not interfere in matters like
regulating market prices, controlling the supply of inputs, fixation of quota on
production etc.
 Firm is a Price Taker not Price Maker
In a perfectly competitive market, firm is a price taker not price maker. It
accepts the price prevailing in the market. Market price is determined based on
the demand and supply of the products.