We begin our study of industrial structure with perfect competition, not because it's a realistic industrial structure, it isn't. We study it because it illustrates many basic concepts very well, and because it represents one extreme form of industrial structure. Outside of some agricultural markets, there are probably no good examples of perfectly competitive industries in the US.
The three primary characteristics that define perfect competition: many firms, identical products, and free entry and exit, will also help us understand the economic behavior of firms
within such an industry.
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