<P> There is a set of market conditions which are assumed to prevail in the discussion of what perfect competition might be if it were theoretically possible to ever obtain such perfect market conditions . These conditions include: </P> <Ul> <Li> A large number of buyers and sellers--A large number of consumers with the willingness and ability to buy the product at a certain price, and a large number of producers with the willingness and ability to supply the product at a certain price . </Li> <Li> Perfect information--All consumers and producers know all prices of products and utilities each person would get from owning each product . </Li> <Li> Homogeneous products--The products are perfect substitutes for each other, (i.e., the qualities and characteristics of a market good or service do not vary between different suppliers). </Li> <Li> Well defined property rights--These determine what may be sold, as well as what rights are conferred on the buyer . </Li> <Li> No barriers to entry or exit </Li> <Li> Every participant is a price taker--No participant with market power to set prices </Li> <Li> Perfect factor mobility--In the long run factors of production are perfectly mobile, allowing free long term adjustments to changing market conditions . </Li> <Li> Profit maximization of sellers--Firms sell where the most profit is generated, where marginal costs meet marginal revenue . </Li> <Li> Rational buyers: Buyers make all trades that increase their economic utility and make no trades that do not increase their utility . </Li> <Li> No externalities--Costs or benefits of an activity do not affect third parties . This criteria also excludes any government intervention . </Li> <Li> Zero transaction costs--Buyers and sellers do not incur costs in making an exchange of goods in a perfectly competitive market . </Li> <Li> Non-increasing returns to scale and no network effects--The lack of economies of scale or network effects ensures that there will always be a sufficient number of firms in the industry . </Li> <Li> Anti-competitive regulation - It is assumed that a market of perfect competition shall provide the regulations and protections implicit in the control of and elimination of anti-competitive activity in the market place . </Li> </Ul> <Li> A large number of buyers and sellers--A large number of consumers with the willingness and ability to buy the product at a certain price, and a large number of producers with the willingness and ability to supply the product at a certain price . </Li> <Li> Perfect information--All consumers and producers know all prices of products and utilities each person would get from owning each product . </Li>

Organisations operating under a market of perfect competition