Characteristics of Perfect Competition Market structure

Perfect Competition Market structure is characterized   by the following features.

1. Many firms (buyers and sellers). There  are  many   sellers   and  buyers   involved   in  this  market structure   and  therefore,   there  is no  single  firm  which  can  influence   the  market  price.  Prices are determined   by the forces of demand and supply.
2. Freedom of entry and exit. Firms are free to enter or leave the industry. When the firms in the industry are making  profits,  new firms  are free to enter  and when  firms  in the industry  are making losses,  some  firms  are free to leave the industry.
3. Homogenous products. All firms under this market structure   sell identical   products.  These force them to charge a uniform price.
4. There is no advertisement. This is because  under  perfect  competition   all  firms  sell  homogenous products  and they charge  a uniform  price.  Therefore,   there is no need to advertise.
5. Perfect knowledge about market conditions. There is no ignorance on the side of the buyers about the prevailing market prices, quality of the products etc.
6. No government intervention. Under this  market  structure,   the  government   does  not  interfere   in economic  activities  in form of taxation  and fixing prices  for commodities.
7. Sellers are price takers. That is,  there  is  no  single   seller  who  can  influence   the  price  of  the commodity.   This is because   the prices of the commodities    are determined   by market   forces of demand and supply.                               .
8. There is perfect divisibility and mobility of factors of production. That is, there is a possibility of dividing   factors   of production    into smaller   units during   the production    process   and factors   of production   are geographically   and occupationally   mobile.
9. Perfectly elastic demand curve. The demand curve of the firm under  perfect   competition    is perfectly elastic.  This is because all firms charge a uniform price and therefore no single firm has the ability to fix its own price.

Note: Pure competition. This is a market structure which satisfies all the features of perfect competition apart from perfect knowledge, mobility and divisibility of factors of production.