What is pure competition?

, also sometimes referred to as perfect competition, is a pure competition where the market for the product is filled with so many consumers and manufacturers that no one has the ability to influence the price of the product sufficiently to cause fluctuations. Within this type of market settings, sellers are considered to be customers of price, indicating that they are unable to determine the price of their products outside a certain extent, given that there are so many other manufacturers on the market. At the same time, consumers have a small impact on the prices offered by manufacturers, because there is no unique group of consumers that dominates demand.

In fact, pure competition is more theory than the real fact. Although there are rare situations in which the market works with a pure competition for a short time, the situation usually changes, because different factors change the stalemate created by a number of acupial sellers. This is often caused by a somewhat strict set of factors that must be present in order to be considered perfector clean.

There are several basic characteristics that define pure competition. One has to deal with the balance of buyers for the seller. If there are an endless number of buyers who are willing to buy products offered for sale by an infinite number of producers, at a certain price, the opportunity for anyone to take steps that move the market price, is very limited. The price remains more or less the same and the same number of buyers buy products from the same range of manufacturers.

with pure competition, sellers can easily get off or enter the market without creating any disproportionate effect on the price. Consumers continue to carry out purchases at the same rate, although two companies are leaving the market and only one new One is entering. Collective manufacturers that are still on the market simply produce enough products to satisfy consumers' demand, without shifting the market price.

businesses involved in the net market usually structure the production to cause marginal costs where they can earn the greatest profit. If the product line is homogeneous, it means that the products produced are basically the same as the product line produced by other suppliers on the market. Assuming the costs are in line with marginal income, the company can generate consistent profit if the condition of pure competition is present on the market.