Perfect Competition | Market in the Economy | Features of Perfect Competition
Perfect Competition Market :- is a market where large number of sellers sell identical products to various buyers.
Features:-
- Homogeneous product :- there is no product differentiation and no distinctive features of the products.
- Large number of buyers and sellers :- every firm is a price taker and sell the products at the going price. Buyer is also a price taker
- Transportation Cost :- there is no transportation cost. Price paid by a buyer is equal to the price received by the seller.
- Knowledge of Market :- every buyer and seller has full knowledge of the prevailing price of the product.
- Economic Rationality:- every buyer and seller is motivated by his own decision to buy or sell the products.
- Free Entry & Exit :- new firm can enter the industry and existing firm can close down and leave the industry, there is no restriction.
- Perfect Mobility of factors of production :- factors of production and workers can freely move from one firm to another.
- No Government Regulation :- There is no government regulation or interference in terms of the tariff, subsidies, etc.