perfect market in short run periodhow can we explain perfect market in short run period??

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krishna-agrawala | College Teacher | (Level 3) Valedictorian

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I have not come across the concept of perfect market. But There is a somewhat related concept called perfectly competitive market. It is primarily theoretical concept used in economics. In realty, perfectly competitive markets do not exist. Only markets with fairly good degree of competition exist which for some purposes in economic analysis be treated as fully competitive market. The question of short run and long run comes up while studying the impact of some changes that may occur in the market. A perfectly competitive market is defined as one with following characteristics.

  1. There are a large number of buyers as well as sellers in the market so that no single seller can influence the market prices, total supply, or total demand.
  2. The product supplied by all the supplies is identical.
  3. There is perfect flow of information in the market. Any changes in the market such as an offer of lower prices by a seller becomes known to all others instantaneously.
  4. There are no barriers to entry or exit. New suppliers can enter the market without any time delay or incurring cost of entry. Similarly existing suppliers can exit the market with out incurring any losses due to exiting the market.

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