Perfect competition occurs when all the firms within the industry have a small share of the market or the market is almost equally split among the different entities. In imperfect competition some of the firms control a larger portion of the market compared to other firms in the same industry.
In perfect competition, no single firm can influence the market price and all the firms are price takers. In imperfect competition, a small number of the firms or even a single firm may control or influence the market prices.
In perfect competition, the firms do not focus on differentiating their products or services and their products remain identical. In imperfect competition, the firms sell highly differentiated products and services.
In perfect competition, the firms are free to enter or exit the market, which means a few trade barriers exist. In imperfect competition, entry and exit from the market are highly restricted due to the high level of trade barriers, which may include capital requirements and government policies.
In perfect competition, the buyers are well informed about the firm’s operations and products. In imperfect competition, access to such information may be restricted.