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perfect competition
(redirected from Perfectly competitive)

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perfect competition

In economics, a market in which there are many potential and actual buyers and sellers, each being too small to be an individual influence on the price; there are no barriers to entry or exit; and the products being traded are identical. At the same time, the producers are seeking the maximum profit and consumers the best value for money. Consumers have perfect knowledge of this type of market.

The unrealistic, underlying assumptions behind this type of market mean that perfect competition is a theoretical model rather than a practical reality. Nevertheless some elements are applicable in free trade.
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Economics teaches us that uncertainty and informational advantages resulting from the division of labor are pervasive facts of markets, except for one market structure in which there is no uncertainty and, more importantly, there is no asymmetric information: the perfectly competitive market model.
Insider trading: is there an economist in the room? by Padilla, Alexandre; Gardiner, Brian / Journal of Private Enterprise
Perfectly competitive equilibrium is also a Platonic ideal in the sense that it is the only stable outcome--that is, the only outcome for which neither buyers nor sellers have an incentive to change their behavior.
Commerce is beautiful by Osborne, Evan / Independent Review
Most firms engaged in international trade do not conform closely with the economists' ideal of being perfectly competitive.
Exchange-rate pass-through to import prices by Humpage, Owen F.; Shenk, Michael / Economic Trends
 
 
 
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