CRITICISM OF THE CONCEPT OF PERFECT COMPETITION
In reality, there is no market in which perfect competition exists. This is due to the following factors: Very few firms produce homogenous products. Even if the products were fairly identical, consumers are unlikely to view them as such. In real situations, consumers prefer variety for fuller satisfaction of their wants; hence homogenous products may not be very popular in these circumstances. There is a common tendency towards large-scale operation. This tendency works against the assumption of having many small firms in an industry. Firms are not found in one place to cut down on transport costs as this market structure requires. Governments usually interfere in business activities in a variety of ways in the interest of their citizens. The assumption of non-interference by the state is therefore unrealistic in real world situations. The information does not freely flow in real markets so as to make both sellers and buyers fully knowledgeable of happenings in all parts of a gi...