Syllabus T. Y. B. A. Paper : IV advanced economic theory with effect from academic year 2010-11 in idol

 
5. Perfect Mobility of factors:
The factors of production such as labour and capital are free 
to move from one place to another, from one use to another and 
from one industry to another. It thus ensures that the factor costs 
are the same for all firms and ensures that all firms get equal 
advantages. Hence a uniform price rules the entire market. 
However, factors will move to that industry which pays the highest 
remuneration. 
 
6. Absence of Transport Costs:  
In this markets it is assumed that as all firms or producers 
work sufficiently close to each other, they do not incur transport 
costs or the transport cost borne is the same and does not add to 
the cost of production. Hence, uniform price prevails in the market. 

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7. No government intervention: 
 
 In this market there is no government intervention i.e., there 
are no taxes, subsidies, control on supply of raw materials etc. 
This condition is essential to allow free entry of firms/ sellers and 
for the automatic adjustment of the market forces of demand and 
supply. 
8. No selling costs:
Selling homogeneous product at a given price rules out the 
possibility of advertisement or other sales promotion expenses. As 
such there are no selling costs incurred in a perfectly competitive 
market. 
 
English economists advocate the concept of perfectly 
competitive markets whereas the American economists prefer to 
conceive 'pure competition model' which has three features viz. 
large number of buyers and sellers, homogeneous product and 
free entry and exit. They believe that such type of markets can be 
found in farm products. According to English economists, the 
perfectly competitive markets are in some ways far removed from 
our real life experiences. Hence, it is said to be a myth or an 
ideal. To be specific, competition becomes imperfect when any of 
the conditions of perfect competition are not fulfilled. However, the 
fact remains that the study of the perfectly competitive market 
does provide a conceptual framework to help us analyse the more 
complex market-situations encountered in real life.