What is a competitive market?

Here is an introduction to the concept of a competitive market that outlines the economic features that competitive markets exhibit. Competitive markets, which are sometimes referred to as perfectly competitive markets or perfect competition, have three specific features.

How do competitive markets work?

Competitive markets, and the concept of perfect competition, work to factor the buyer and seller equally and form strategies based on the market's current supply and demand. In this article, we define competitive markets, outline their characteristics and explain their purposes and differences. Key takeaways:

What is a perfectly competitive market?

A perfectly competitive market is a hypothetical extreme. Producers in a number of industries do, however, face many competitor firms selling highly similar goods, in which case they must often act as price takers. Agricultural markets are often used as an example. The same crops grown by different farmers are largely interchangeable.