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.