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What reasons are there for questioning the view that perfect competition is not an ideal form of market structure?
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What reasons are there for questioning the view that perfect competition is not an ideal form of market structure? Market structures have three defining characteristics. These are the number of firms; the ease of entry and exit from the market; and the degree to which the product is differentiated. Perfect competition is found in a market in which buyers and sellers recognise that the amounts they sell or buy have no effect on the market price. Therefore, each firm in the industry has a horizontal demand curve. For whatever the firm sells, it receives the market price. If the price is higher than the market price, the firm will not sell any products, as consumers will go to other sellers in the market. However, the firms can sell as much they want at the market price so prices will not fall below that price. A market in perfect competition has many...
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