perfect competition: meaning, definition, pronunciation and examples
Low in general use, but high in academic/business economics contexts.Formal, academic, technical (economics).
Quick answer
What does “perfect competition” mean?
A theoretical economic model describing a market structure where many firms offer identical products, no single buyer or seller can influence the price, and there are no barriers to entry or exit.
Audio
Pronunciation
Definition
Meaning and Definition
A theoretical economic model describing a market structure where many firms offer identical products, no single buyer or seller can influence the price, and there are no barriers to entry or exit.
Sometimes used metaphorically to describe any arena with a large number of participants, equal access to information, and no single entity holding dominant power.
Dialectal Variation
British vs American Usage
Differences
No significant lexical or conceptual differences. Spelling follows local conventions (e.g., 'behaviour' in UK academic texts vs. 'behavior' in US).
Connotations
Identical technical connotations in both varieties.
Frequency
Equally frequent in economics literature in both regions.
Grammar
How to Use “perfect competition” in a Sentence
[Market/Industry] + operates under/in + perfect competitionPerfect competition + exists in + [market][It] is a case of perfect competitionVocabulary
Collocations
Examples
Examples of “perfect competition” in a Sentence
adjective
British English
- The conditions for a perfectly competitive market are rarely met.
American English
- A perfectly competitive firm is a price taker.
Usage
Meaning in Context
Business
Used in strategy discussions to benchmark real market conditions: 'Our industry is far from perfect competition; we have significant brand loyalty.'
Academic
Central concept in microeconomics for analysing market efficiency, welfare theorems, and as a baseline for comparing other market structures.
Everyday
Very rarely used. Might appear in simplified discussions about markets or in critiques: 'It's not perfect competition; a few big companies control everything.'
Technical
Defined by specific assumptions: homogeneous goods, perfect information, price-taking behaviour, free entry and exit, and zero transaction costs.
Vocabulary
Synonyms of “perfect competition”
Strong
Neutral
Weak
Vocabulary
Antonyms of “perfect competition”
Watch out
Common Mistakes When Using “perfect competition”
- Using as an adjective-noun pair incorrectly (e.g., 'a perfect competition' - usually non-count).
- Confusing it with simply 'intense competition'.
- Using it to describe a desirable state without referencing its theoretical assumptions.
FAQ
Frequently Asked Questions
It is a theoretical model. Some markets, like certain agricultural commodity markets, may approximate its conditions but never fully meet all assumptions.
In the model, yes. It leads to allocative and productive efficiency, resulting in the lowest possible price for a homogeneous good.
In monopolistic competition, firms sell differentiated products (e.g., through branding), giving them some power to set prices, unlike in perfect competition.
In the long run, economic profit is zero due to free entry and exit. Firms make only normal profit, which is the minimum to keep them in business.
A theoretical economic model describing a market structure where many firms offer identical products, no single buyer or seller can influence the price, and there are no barriers to entry or exit.
Perfect competition is usually formal, academic, technical (economics). in register.
Perfect competition: in British English it is pronounced /ˈpɜːfɪkt ˌkɒmpəˈtɪʃən/, and in American English it is pronounced /ˈpɜːrfɪkt ˌkɑːmpəˈtɪʃən/. Tap the audio buttons above to hear it.
Learning
Memory Aids
Mnemonic
Think of a PERFECTLY flat race with countless identical runners (firms), all starting at the same line (no barriers), with the crowd (buyers) knowing every runner's time (information). No runner can win by pushing others; they just run at the market price.
Conceptual Metaphor
THE MARKET IS A LEVEL PLAYING FIELD
Practice
Quiz
Which of the following is NOT a condition for perfect competition?