Distinguish between perfect competition and imperfect competition.

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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.

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There is no single market structure known as "imperfect competition," so we must distinguish here between perfect competition and all other market structures.

The truly unique thing about perfect competition is that firms in such a market have no control over the price they can charge and can make no economic profit.  Outside of that, all characteristics of perfect competition are shared by at least one other market structure.  There can be many competitors in monopolistic competition and it is easy to enter or exit such a market.  Firms in an oligopoly can sell homogeneous products.  What is unique to perfect competition is that all of these conditions are present, making it impossible to make economic profit.

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