Pure Competition

 Pure Competition is said to exist when the following two conditions are fulfilled:

(i) Large Number of Buyers and Sellers:

The first condition is that there should be operating in the market a large number of buyers and sellers. If that is so, no single producer or purchaser will be able to influence the market price by varying respectively his supply or demand. The output of any single firm is only a small portion of the total output and the demand of any single purchaser is only a small portion of the total demand. Hence, the market price has to be taken as given and unalterable by every purchaser and seller. 

(ii) Homogeneous Product:

The second condition is that the articles produced by all firms should be standardised or identical. This condition ensures that the same price rules in the market for the same commodity. In case the output is not standardised (i.e., it is differentiated), each individual firm will be in a position to influence the market price.

If the above two conditions, viz., homogeneous products and a large number of buyers and sellers are found in a market, it is said to be under pure competition.