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ID number:689275
Published: 20.02.2012.
Language: English
Level: College/University
Literature: n/a
References: Not used

Perfect competition is seen as an ideal or optimum form of market because of its very beneficial economic effect for society, which comes from allocative efficiency and productive efficiency. In spite of its beneficial economic effect, perfect competition fails to provide any correction for income distribution inequity, generate any public goods since there is not profit, stimulate technological progress because of lack of profīts or offer diversity in products since these are standardized.
Perfect competition describes a market structure whose assumptions are extremely strong and highly unlikely to exist in most real-time and real-world markets. While unrealistic, it does provide an excellent benchmark that can be used to analyze real world market structures.
There are no pure examples of a perfectly competitive market, but virtually the perfect competition with some deflections exists in Exchange of goods, which trades with cereals, oil, coffee, some varieties of metals, currency or securities. Here no one of firms can influence the situation in a market, because the piece of these firms is quite small. Also the staple food and vegetables we buy from the market is perfect competition. However when they start branding they move toward oligopoly.

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