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perfect competition
Sign in to saveAlso known as atomistic competition, atomistic market
market structure in which firms are price takers for a homogenous product
~40 min read
Encyclopedic overview
In economics, specifically general equilibrium theory, a perfect market, also known as an atomistic market, is defined by several idealizing conditions, collectively called perfect competition, or atomistic competition. In theoretical models where conditions of perfect competition hold, it has been demonstrated that a market will reach an equilibrium in which the quantity supplied for every product or service, including labor, equals the quantity demanded at the current price. This equilibrium would be a Pareto optimum.
Perfect competition provides both allocative efficiency and productive efficiency:
Excerpted from Wikipedia’s “perfect competition” article, available under the CC BY-SA 4.0 licence.