What is a Perfect Market?

A perfect market is market that is structured to have no anomalies that would otherwise interfere with the best prices being obtained. Examples of this perfect market structure are:

A large number of buyers
A large number of sellers
Products are homogeneous
Information is freely available to everyone in the market
There is no collusion between the market participants
Every participant is a price taker, not having the ability to influence market prices

There are few perfect markets; those selling commodities, such as agricultural products, represent the closest approximation of a perfect market.

It is generally not a good idea to be a seller in a perfect market, because prices are driven down so low that it is quite difficult to generate a reasonable profit. Consequently, many sellers seek out less perfect markets, where they can realize higher profit levels.