A market economy can be called a complex system that combines financial, manufacturing, information, legal and commercial organizations. All of them can be characterized by one concept - the market. This is a place where there are consumers who have a demand for a certain category of goods at a certain price, and manufacturers who can offer a certain amount of goods at this price. The market allows you to set prices and sales.
The determining factor in market relations is competition. This is a certain relationship between manufacturers, as a result of which prices and volumes of products sold are set. There is competition between consumers, which also affects these indicators. Competition is an essential condition for the formation of market relations.
Different types of market are distinguished depending on the type of competition.
The market for perfect competition is a model of market relations that is considered ideal. However, there are no restrictions restraining the development of the market.
The market of perfect competition has both positive and negative aspects. Its signs are:
1. A large number of sellers who do not affect the overall market situation, due to the small share in the sales volume. A large number of consumers are also present. This is an automated market.
2. The absence of restrictions on entering the industry that supplies goods to this market, as well as the free movement of resources from one object to another.
3. The lack of heterogeneity of goods. That is, there are no brands, brands, etc. on the market.
4. The market of perfect competition is characterized by the inability of sellers or consumers to influence the price level. The cost of goods is established spontaneously. Other market participants also cannot influence pricing.
The perfect competition market is open to all participants. Supporting factors, such as promotions, do not have much impact on sales. This is due to the fact that the products presented are homogeneous. The market is absolutely transparent.
This market has a clearly defined value - the value of the goods.
In this regard, the market of perfect competition forms a certain model of participants' behavior. They can be presented in several options.
The first option is the price acceptor. All market participants have complete and open information about the value of the goods. None of the participants has any influence on pricing. If the seller overprices, then the buyers go to his competitors. If the price is too low, the seller will not be able to satisfy the emerging demand completely.
The second option, present on the market with perfect competition, is the regulator of the quantity of goods. Each seller, in connection with the openness of the market, can regulate the amount of goods sold.
Summarizing the aforesaid, it can be noted that the labor market in conditions of perfect competition is also considered more open and accessible. Each participant has the right to choose the most suitable conditions, which are equal for all.
However, such a market model is quite rare. Imperfect competition predominates , in which not all participants have equal opportunities. With such an organization, the emergence of a monopoly is likely. Some market participants have the ability to influence the value of goods or services.
This is what distinguishes the market for perfect and imperfect competition from each other. Basically, this is inequality of opportunity, the impact on the price of market participants, unfree access to the market and unfair competition.