What Is Pure Competition

When any businessperson enters to the market, they have to follow certain guidelines and theoretical state.  Pure competition is of market structure where there is no influence of buyers or sellers over the product that is introduced in the market.  This theory rejects the monopoly over the market enterprise. Any seller or manufacturer enters into the market, can sell the product at the desired price. In the pure competition, the larger number of buyers and sellers interact with each other and anybody can replace it with the similar products. The consumer decides the price rate of the products and randomly the producer adjusts them according to the productivity.

Now let understand in detail, how does the pure competition works?

In the pure competition market, there are group of persons who decide who will produce the goods? There is no interference of government in term of laws, like equal employment, anti-discrimination law, or affirmative action. If you take into account in the pure competition market, the producer has freedom to produce goods but on the labor’s end, it enhances the labor discrimination. Moreover, since there is no interference of government in the pure competition market thus there is no quality check. Sometimes the producer uses the cheaper quality to make maximum profits. It is certain that everyone tries their best to make some profit and it is the customer at end who faces the wrath.

If you are wondering about the types of goods that are produced in the pure competition market, and subsequently the quantity, the let me tell you, you have complete freedom of choice. In the pure market system, the producer decides what they want to produce and which product can yield them the maximum profits. The producer decides the quantity of the production himself or herself. If you are facing the loss, you can minimize the production where as if the sales rates go high, then you can produce as much as you want.

For fixing the prices of the goods, the government does not define any policy for its maximum or the minimum limits. The goods are produced by the manufacturers and are completely in their hands. They decide the price tag according to the market enforcement, and finally try to make as much profit as they can make. They best part on the producers end is that in the pure competition market, you do not have to pay taxes or tariffs. It gives liberty to the manufactures to increase the level of the profitability.

In the pure market system, the goods are sold to the highest bidder and therefore, consumers are generally harmed. Consumers try to get the goods at the lowest price and therefore, price equilibrium states with the compromise of the both consumer and the producer.