The full competition is a form of the marketplace with a large number of buyers and sellers. They sell homogeneous goods. The firm produces only a small portion of the total production produced by the whole industry. An industry is a group of different firms producing the same product. No firm can affect the price with its personal efforts. The price is fixed by the industry. The firm is only going to take the price, not making the price. This can sell the desired production only at the price set by the industry. The price of object is similar everywhere in such a market. The entry and exit of firms is also free. Both the buyer and seller have full information about its current price in the market. Thus the full competition is the name given to the marketplace in which buyers and sellers compete with each other in the purchase and sale of an item. None of them have any personal impact on the price of the object.
Mrs. Zone Robinson defined the full competition as follows: full competition is when the demand for each manufacturer’s production is completely elastic. That means, first of all, the number of sellers is big so that any seller’s production negligible small ratio is of the total production of the item and second, buyers are alike in terms of their choice with respect to rival sellers, so that the market is correct. ‘
According to Bilas, the characteristic of the full competition is the presence of many firms: they all sell the same products, the seller is the picker of the price. “
Ferguson said, “The full competition describes a market that has a complete absence of direct competition among economic groups.
Features
symptoms or necessary
Different definitions given by different economists point to specific characteristics of the full competition. We can list various features, which indicate that the market’s format is completely competitive. In other words, there are some necessary conditions that should be met if the market has to be completely competitive, we can explain these below:
(1) Large number of buyers and sellers. There should be many buyer and seller so that no impact on the market value of a seller or one buyer’s behavior. Each buyer includes such a small portion of the total (market) demand of the product, and each seller includes such a small portion of the total (market) supply that any changes in their plans will have no impact on the market price.
(2) Free entry or exit. Firms must be complete the freedom to enter the industry or leave the industry. New firms should be allowed to set themselves up in the industry if they think it offers an attractive opportunity otherwise competition will be banned and therefore it won’t be full competition. It’s not always listed as a different/between, because it is considered built-in in another. In other words, if the manufacturers (firms) in an industry are many more smaller, who are functioning freely from each other, there’s no possibility of new firms being stopped on entry. If profits occur in the short term, new companies can enter the industry and/or existing companies can expand their plants scale.
3) Lack of transportation cost. In full competition – the price is the same, it is possible only if we assume that the transport cost is not present in a full competitive market. This notion (unseen the cost of transportation) will equate the price of product and factor input in geographically and among all alternative uses.
4) Full knowledge of economy. In a full competitive market, all buyers and sellers should have correct information about the market activities.
(5) homogeneous products. Products supplied by all firms are almost homogeneous. Uniformity of products means products supplied by different firms are so similar in appearance and use that buyers do not differentiate between them nor do they like one firm’s product to another’s product.