Pure competition, also known as perfect competition, is a theoretical market structure in which a large number of buyers and sellers are present and all participants have access to complete information about prices, products, and services. In a pure competition market, no single participant has the ability to influence prices or determine the quantity of goods and services produced, as the market is dominated by numerous small firms producing homogeneous products.
One example of a pure competition market is the agricultural industry, where farmers produce a wide variety of crops and livestock for sale. The market is highly competitive, as there are many farmers producing similar products, and consumers have access to a wide range of choices. In this market, farmers have little control over prices, as they are largely determined by supply and demand.
Another example of pure competition is the foreign exchange market, where buyers and sellers trade different currencies. This market is characterized by high liquidity, as there are many participants and a large volume of transactions taking place at any given time. The foreign exchange market is also influenced by a variety of factors, including economic conditions, political stability, and interest rates, which make it difficult for any single participant to influence prices.
The internet has also facilitated the emergence of pure competition in a number of industries, including retail and e-commerce. Online marketplaces, such as Amazon and eBay, allow buyers and sellers to connect and trade goods and services without the need for a physical location. This has led to increased competition and lower prices for consumers, as sellers are able to reach a wider audience and compete with each other to offer the best prices and services.
In conclusion, pure competition is a market structure characterized by a large number of buyers and sellers, access to complete information, and the production of homogeneous products. Agricultural and foreign exchange markets, as well as online marketplaces, are all examples of pure competition in economics.