Review:
Perfect Competition
overall review score: 4
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score is between 0 and 5
Perfect competition is a market structure where a large number of firms sell identical products, allowing for free entry and exit of businesses. Prices are determined by market forces with no single firm having the power to influence prices.
Key Features
- Large number of buyers and sellers
- Homogeneous products
- Perfect information
- No barriers to entry or exit
- Price takers
Pros
- Efficient allocation of resources
- Promotes innovation and efficiency
- Low prices for consumers
Cons
- Lack of product differentiation can lead to commoditization
- Potential for market failure in the long run