ECONOMICS: PERFECT COMPETITION

Perfect competition exists when there is a very large number of small companies trading in the same or very similar commodities or services, and none of whom can affect the price by increasing output or restricting it.Also, the entrepreneurs have perfect knowledge about costs and prices across the market. Everyone knows the state of everyone else's costing and has perfect information on the likes and dislikes of buyers. There are no barriers to entry into the market. Anyone can join if they believe there is money to be made.

But as soon as one trader begins to advertise or use a brand name to attract trade, the market perfection will be lost.

When each trader tries to create a niche in the market, by claiming higher quality or a long-established family tradition for service, the competition will become less than perfect.

The petrol industry would be the perfect example for this topic

The many petrol companies. ( I am a shell user by the way.)

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Petrol companies like Petronas, Shell, Esso, Petron and etc sell petroleum and diesel at a fixed price because it is under the government influence. Government needs to set the prices of petroleum and diesel at a fixed price so that it will be equal . The market share will also be automatically adjusted to constant because there are too many companies selling petroleum and diesel nowadays.