Pure competition, called the "perfect", is a constant confrontation, the struggle taking place in the market. Usually it interacts with a large number of companies that produce homogeneous and standard products. In such conditions, any company has the opportunity to go public, as there is no price control.
The market of pure competition is distinguished by the fact that not one of its participants has an impact on value. The fact is that the seller will not be able to ask for the higher than the approved price, since in this case, buyers have the opportunity to purchase the goods they need from another supplier. Consider this position in more detail.
Firstly, we are talking about the fact that certain products are presented on the market that are the same for all sellers. For example, the buyer will be satisfied with rye in any case, regardless of who he purchased it from.
Secondly, all participants have the same and complete information about market conditions, and therefore pure competition is taking shape.
Thirdly, their impact will not be able to influence this process.
Therefore, the market of perfect competition is a market in which there is a tendency to establish the same value per product at one particular time.
The mechanism of its functioning is special. Consider its activities in more detail on the example of the acquisition of rye. So, if its value increases with increasing demand, the farmer will certainly respond to this by expanding its plantings for next year. For the same reason, other peasants who did not do this before, sowing more and more areas, will do the same. Naturally, next year, under favorable climatic conditions, the supply of rye in the market will increase. As a result, this will lead to a drop in market value. Therefore, all farmers, even those who did not expand their acreage for rye, will experience sales problems, even at a low price.
Consequently, pure competition, or perfect, can only be realized if a number of laws are respected.
Firstly, there are a huge number of participants in market relations and the presence of a free struggle between them.
Secondly, each of them has free access to any activity within their framework.
Thirdly, absolute mobility in factors of production and unlimited freedom in the movement of capital should be noted.
Fourth, there should be full awareness of market participants about the rate of demand, profit, supply, sales and so on.
Fifthly, it is necessary to observe the law of reasonable behavior of all subjects of market relations.
Sixth, only uniformity of goods is permissible. There should be no lack of brands, trade logos, company marks and so on.
Seventhly, there can be no situation where any market participant has a direct and negative impact on the decisions of others using non-economic methods.
Eighth, pure competition allows the establishment of a spontaneous statement of value.
Ninth, there should be no monopoly and the presence of only one manufacturer.
Tenth, monopsony is unacceptable, that is, the presence of a single buyer, as well as state interference in its functioning.
Given the selected laws, you can create the perfect market for pure competition.
However, in reality, situations when all the necessary conditions are present, appear quite rarely. The fact is that there is no perfect and free market, and most of them operate according to the laws established by monopolistic competition.