|  Perfect Competition - Part 1 -
May 27th, 2009
A market becomes perfectly competitive when the following conditions exist:
(i) A Large Number of Buyers and Sellers: Both buyers and sellers are in a large number, so that individually neither buyer nor seller is in a position to influence the price. Influence of an individual buyer or seller is absolutely insignificant. They will have to accept the price established in the market. A single seller cannot increase the price. If he does he will not get buyers. The buyer cannot bargain for a lower price, as there are enough buyers at the prevailing price.
(ii) Homogeneous Commodity: A commodity sold in the market is homogeneous , that is, identical in quality and size. A difference of any type would provide an excuse for the sellers to charge a higher price. When goods are homogeneous there is no possibility of charging a higher price by any seller under the pretext of qualitative or quantitative difference.
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