Difference between Monopoly and Perfect Competition
Perfect competition is a term used in economics to indicate a situation under which no seller of a good or service has enough power to set or alter the price of the product on its own. In simple words no seller can decide the price of the product, no matter how big it is. A perfect market is characterized by a large number of buyers and sellers, who are willing to buy and sell a homogeneous product at a given price, no barriers to entry and exit in the market, no transportation cost are involved etc….
While as far as monopoly is concerned, it refers to a situation where a company has a significant control over a product or service which enables them to set the price of a product or service and buyers will have to pay that price which is set by the seller. A monopoly is characterized by a single seller and large number of buyers, also there are some entry barriers which helps a company to maintain its monopoly powers.
In real life both perfect competition and monopoly are seldom found, rather it is somewhere in the middle that is seller does not have either complete control as in case of monopoly or no control as in case of perfect competition over prices, rather only partial control over the prices of product and service.