Perfect competition describes markets such that no participants are large enough to have the market power to set the price of a homogeneous products or services that are not branded. This means that the single firm is said to be a price taker, taking its price from the whole industry. The key characteristics of perfectly competitive markets are the following: a very large numbers of firms in the market; no barriers to entry into or exit out of the market; perfect knowledge, with no information failure or time lags; no need for government regulation, except to make markets more competitive; no external costs or benefits and firms can only make normal profits in the long run and abnormal in the short run.
The good example of this competition type is Borough Market that is one of the oldest and largest food markets in London and sells a large variety of food from all over the world: Italian cheeses, Morecambe Bay shrimps, Spanish foods, Croatian sweet products, German breads and cakes, domestic fruits and vegetables and much more. There are a lot of greengrocers who come to trade at the market from different parts of the UK and offer artisanal products as bakers, huge range of food and drink, spices and so on. Customers always can find what they want and be satisfied.
As for real conditions then there is no ideal example of any fact or item that is perfectly comply with necessary requirements. Thus Borough Market almost doesn’t have barriers to entry into the market but capital is one of them and, of course, every trader needs it to start up. The same for customer loyalty, it’s not the most important, but it provides the vendor with the ability to grow profits. In case of customers’ dissatisfaction the trader will have problems and complaints that lead to decrease in the quantity of consumers and revenues decrease.
Price policy is reasonable but prices could be differed depending on the food origin, for example. Also for elite products prices are suitable. The producers offer free samples of their goods, confident in the quality of their product to secure a sale. The goods are standardized, top quality produced and artisan from all over Britain and the continent.
Borough Market – the only fully independent market in London – is owned by a charitable trust, the Borough Market (Southwark) Trust, run by a board of volunteer trustees. Earlier it was owned by the City Corporation and was transferred to an independent trust in 1999.
So Borough Market has a worldwide reputation as a centre of excellence for food and drink, offering exceptional British and International produce from over 130 Traders who share the Market’s commitment to seasonality, diversity, sustainability and affordability. Customers – who include local shoppers, chefs, families, restaurateurs and keen cooks – make their purchases confident of both the authenticity and the comparable affordability of the products.