The market of perfect competition. Its concept and essence

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2018-03-18 19:06:03

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The Market economy is a complex system that integrates financial, manufacturing, it, legal and commercial organizations. All of them can be described in one concept – the market. It's a place where there are consumers who have a demand for a certain category of goods at a certain price, and manufacturers that can offer a number of products at this price. The market allows to set prices and sales volumes.

Determining the party of a market competition. It is certain relationships between manufacturers, which sets prices and volumes of products sold. There is a competition between users, which also affects these figures. Competition is an essential condition for the formation of market relations.

There are several types of market depending on the type of competition.

The Market of perfect competition – it is a model of market relations, which is considered ideal. While there are no restrictions hindering the development of the market.

The Market of perfect competition has both positive and negative aspects. Its attributes are:

1. A large number of sellers which do not affect the overall situation on the market, due to the low share in the volume of sales. Also there is a large number of consumers. This is an automated market.

2. The lack of restrictions when entering the industry that delivers goods the market and the free movement of resources from one object to another.

3. The lack of heterogeneity of goods. That is, in the market of trade marks, brands, etc.

4. The market of perfect competition is characterized by the inability of sellers or consumers to influence the price level. The value of the goods is established spontaneously. Other market participants also can't influence the pricing.

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The Market of perfect competition is open to all participants. Auxiliary factors, such as promotions, do not have much impact on sales. This is because the goods are homogeneous. The market is completely transparent.

This market has a clearly specified value-the value of the goods.

In this regard, the market of perfect competition generates a pattern of behavior of the participants. They can be presented in several variants.

The First option is the accepter rates. All market participants have full and open information about the value of the goods. None of the participants has on the formation of prices no effect. If the seller inflates the price, then the buyers go to its competitors. If the price is too low, the seller will not be able to satisfy emerging demand in full.

The Second option present in the market with perfect competition, it is the control of goods. Each seller in connection with the openness of the market may adjust the amount of goods sold.

Summing up the above it can be noted that the labour market in conditions of perfect competition is also considered to be more open and accessible. Each participant is entitled to choose the most suitable conditions that are equal for all.

However, this market model is fairly rare. Mainly dominated by imperfect competition in which not all participants have equal opportunities. Such an arrangement is likely to create a monopoly. Some market participants have the opportunity to influence the cost of goods or services.

This is the difference between the market perfect and imperfect competition from each other. Basically, it's inequality of opportunity, the impact on price from the market participants, non-free market access and unfair competition.


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Alin Trodden - author of the article, editor
"Hi, I'm Alin Trodden. I write texts, read books, and look for impressions. And I'm not bad at telling you about it. I am always happy to participate in interesting projects."

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