Pure competition is a term that describes a market that has a broad range of competitors who are selling the same products. It is often referred to as perfect competition. Here are some characteristics that define a pure competition.
In an ideal purely competitive market, the products being sold would be identical, which removes the option of one seller offering something different or better than another seller.
Because there are so many competitors in the market offering the same product at the same price, one competitor doesn't have an edge over the others. Essentially, all the sellers are equal.
New companies can easily enter the market.
The price of products is determined solely by what consumers are willing to pay.
To further illustrate pure competition, let's imagine that you are purchasing assorted color latex balloons. You go to your local party store where you find several different brands of balloons available. There are five different brands of 10-inch assorted color balloons, and they are all priced at 99 cents per package.