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Chapter 7
6.4 Types of market
A perfect market exists when the following criteria are met:
– Large numbers of customers and suppliers – none of whom have the
power to dominate the market.
– The products or services sold by all suppliers are identical (homogenous).
– There is perfect information – all customers and suppliers have complete
information on the prices that goods and services are being sold at
elsewhere in the market.
– No barriers to entry to, or exit from, the market – that is, competitors can
easily enter and exit the market.
This is seen as being the ‘ideal’ market position. If any of the factors above do not
hold true, the market is described as imperfect. In the real world, most markets are
imperfect.
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