PERFECT COMPETITION: An ideal market structure characterized by a large number of small firms, identical products sold by all firms, freedom of entry into and exit out of the industry, and perfect knowledge of prices and technology. This is one of four basic market structures. The other three are monopoly, oligopoly, and monopolistic competition. Perfect competition is an idealized market structure that's not observed in the real world. While unrealistic, it does provide an excellent benchmark that can be used to analyze real world market structures. In particular, perfect competition efficiently allocates resources. See also | market structure | firm | monopoly | oligopoly | monopolistic competition | perfect competition and demand | perfect competition and efficiency | perfect competition characteristics | perfect competition and short-run supply curve | monopoly and perfect competition |
