3. PERFECT COMPETITION
• A theoretical market structure.
• Competition among sellers and buyers prevails in its
most perfect form.
• Single market price prevails for a commodity.
• The industry that most closely resembles perfect
competition - Agriculture.
4. CHARACTERISTICS OF
PERFECT COMPETITION
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Infinite buyers and sellers
Zero entry and exit barriers
Perfect factor mobility
Perfect information
Profit maximization
Homogenous products
Non-increasing returns to scale
Rational buyers
No externalities
6. IMPORTANCE
• Simple & convenient form of market to understand.
• Gives a clear insight to how a market economy
works.
• First step in understanding nature of complex forms
of market structure.
• Ideal form of market under normative grounds.
7. IMPERFECT COMPETITION
• Introduced by Mrs. Joan Robinson and Chamberlin.
• A type of market that does not operate under the
rigid rules of perfect competition.
• Forms of imperfect competition include monopoly,
duopoly, oligopoly, monopolistic competition.
8. OLIGOPOLY
Market structure in which there are few firms producing
either identical products or differentiated products.
“COMPETITION AMONG FEW”
