Perfect competition is a market structure in which numerous small firms compete with each other to sell homogeneous products to a large number of buyers. In a perfect competition market, no single firm has the power to influence the market price of the product. The market price is determined by the forces of demand and supply.

Characteristics of Perfect Competition Market:
1. Large number of buyers and sellers: In a perfect competition market, there are numerous buyers and sellers, none of whom have the power to influence the market price.

2. Homogenous products: All firms in a perfect competition market produce identical or homogenous products, which are perfect substitutes for each other.

3. Free entry and exit of firms: Firms can enter or exit the market freely without any restrictions.

4. Perfect knowledge: Buyers and sellers have perfect knowledge about the market conditions, including prices and quality of products.

5. Perfectly elastic demand curve: In a perfect competition market, the demand curve for each firm is perfectly elastic. This means that the firm can sell any quantity of the product at the market price.

6. Zero economic profit in the long run: In the long run, firms in a perfect competition market earn zero economic profit, as new firms can enter the market and drive down the profits.

7. Price takers: Firms in a perfect competition market are price takers, as they have no power to influence the market price. They have to accept the prevailing market price.

8. Mobility of factors of production: Factors of production, such as labor and capital, can move freely between different firms in the market.

Conclusion:
Perfect competition is a theoretical market structure that is rarely found in the real world. However, understanding the characteristics of perfect competition helps in analyzing other market structures and their implications for the economy.

A Perfect Competition market may be defined as a large number of buyers and sellers all engaged in the purchase and sale of identically similar commodities, who are in close contact with one another and who buy and sell freely among themselves.”
CHARACTERSTICS:
1. Large Number of Buyers and Sellers:

The first condition is that the number of buyers and sellers must be so large that none of them individually is in a position to influence the price and output of the industry as a whole. In the market the position of a purchaser or a seller is just like a drop of water in an ocean.

2. Homogeneity of the Product:

Each firm should produce and sell a homogeneous product so that no buyer has any preference for the product of any individual seller over others. If goods will be homogeneous then price will also be uniform everywhere.

3. Free Entry and Exit of Firms:

The firm should be free to enter or leave the firm. If there is hope of profit the firm will enter in business and if there is profitability of loss, the firm will leave the business.

4. Perfect Knowledge of the Market:

Buyers and sellers must possess complete knowledge about the prices at which goods are being bought and sold and of the prices at which others are prepared to buy and sell. This will help in having uniformity in prices.

5. Perfect Mobility of the Factors of Production and Goods:

There should be perfect mobility of goods and factors between industries. Goods should be free to move to those places where they can fetch the highest price.

6. Absence of Price Control:

There should be complete openness in buying and selling of goods. Here prices are liable to change freely in response to demand and supply conditions.

7. Perfect Competition among Buyers and Sellers:

In this purchasers and sellers have got complete freedom for bargaining, no restrictions in charging more or demanding less, competition feeling must be present there.

8. Absence of Transport Cost:

There must be absence of transport cost. In having less or negligible transport cost will help complete market in maintaining uniformity in price.


9. One Price of the Commodity:


There is always one price of the commodity available in the market.

10. Independent Relationship between Buyers and Sellers:

There should not be any attachment between sellers and purchasers in the market. Here, the seller should not show prick and choose method in accepting the price of the commodity. If we will see from the close we will find that in real life