Perfect Market

Definition of 'Perfect Market'

The following assumptions hold:
(a) there is a large number of buyers;
(b) there is a large number of sellers;
(c) the quantity of goods bought by any individual transactor is so small relative to the total quatity traded that individual trades leave the market unaffected;
(d) the units of goods sold by different sellers are the same - the product is homogeneous;
(e) there is perfect information = all buyers and sellers have complete information on the prices being asked and offered in other parts of the market; and
(f) there is perfect freedom of entry to and exit from the market.

Related Terms