perfect competition

  

Definition

The theoretical free-market situation in which the following conditions are met: (1) buyers and sellers are too numerous and too small to have any degree of individual control over prices, (2) all buyers and sellers seek to maximize their profit (income), (3) buyers and seller can freely enter or leave the market, (4) all buyers and sellers have access to information regarding availability, prices, and quality of goods being traded, and (5) all goods of a particular nature are homogeneous, hence substitutable for one another. Also called perfect market or pure competition.

Use perfect competition in a sentence

  • While perfect competition isn't very common in many industries, it can be found in the agriculture industry because customers have a wide range of choices of very similar products.

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