Economy

Perfect competition

Perfect competition that occurs within a given market, is the one that happens when none of the agents participating within the market can exert any kind of influence on the price of a given product or service, this means that sellers and buyers are price-accepting. It is a type of market in which there are a large number of producers for the same homogeneous product or service, where the demand curve is very accessible and changing and the market price originates from the interaction between suppliers and demanders.

What is perfect competition?

Perfect competition is the type of competition that occurs in markets or in a given market in which the agents participating in this market, may exert an influence on the product or goods prices, which puts sellers and buyers in a price-accepting position.

When we talk about perfect competition, we are referring to an economic situation that is almost ideal, and which at the same time, is very unlikely to happen in reality because in the real world, there is no such simple, perfect and ideal economy. However, the perfect economy can be a very useful tool in the economic study of markets that, in some cases, may come to look like, but the truth is that there are very few types of markets that can be considered total or perfectly competitive. In some economic aspects, we can observe some types of similar markets in the agricultural sector, in auctions or in the raw materials market, to a lesser extent.

Characteristics of perfect competition

Perfect competition assumptions

Advantages of perfect competition

Disadvantages

Examples of perfect competition

Cimaplas Group (Mexico)

They produce plastic bags, brooms, cleaning supplies and more. They offer the products at the same price; the competition is quite strong, and the suppliers are price-accepting because there is freedom of access. If the sellers make a profit, prices go down so that, they can compensate the money invested in the companies.

Estebana (Colombia)

This is one of the examples of perfect competition that involves the great offer of cleaning products and general cleaning products for home that we can see in all shops and trades. In this way, the products become market products of perfect competition because there is freedom of offer among the producers, because there is facilities for offering and advertising. Some recognized brands are: Fab, Ace, Soflan, Suavitel, Super muscle, Ariel among many others.

Written by Gabriela Briceño V.
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