Difference between perfect competition and pure competition


Sometimes, economists distinguish between pure competition and perfect competition.

Pure competition is said to exist in a market where (a) there is a large number of buyers and sellers (b) products are homogeneous and (c) there is freedom of entry and exit of buyers and sellers. The implication of these conditions taken as a whole is that no individual seller is in a position to influence the price in the market. In perfect competition, all the three features of pure competition exist. Besides these, perfect competition has more features. These are (d) perfect knowledge of the buyers and sellers regarding the market conditions (e) perfect mobility of factors of production (f) absence of transport cost and (g) uniform price.

Thus, perfect competition is not only pure but also free from other imperfection. It is a broader concept than pure competition. The essential feature of pure competition is the absence of any monopoly element.


In the words of Chamberlin, pure competition means “Competition unalloyed with monopoly elements” whereas perfect competition involves “perfection in many other respects than the absence of monopoly.” It is possible to come across pure competition in real life but not perfect competition.

The American economists attach great importance to pure competition whereas the English economists emphasize perfect competition. The difference between the two is one of degree and not of kind.

The demand curve facing a firm under pure and perfect competition is a horizontal straight line. It is due to their characteristics. Under perfect competition, there is large number of buyers and sellers. The products are homogeneous.

There is freedom of entry and exist of buyers and sellers. Factors of production are freely mobile. The transport cost is nil. There is no place for advertisement. Single price prevails in the market. Buyers and sellers are price takers. Sellers are output adjusters. Each seller and each buyer faces a price that is determined by the market forces, which are beyond his control.


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