Atomistic Competition

Definition of Atomistic Competition:

A market structure where firms are so numerous that the market represents perfect competition. In atomistic competition there will be the following features:

  1. Many small firms
  2. The absence of economies of scale
  3. Firms do not have the ability to set prices (they are price takers)
  4. Low Profits and low prices for consumers

Atomistic competition is quite rare in the real world. But, examples could include farmer’s markets for a product like potatoes. Many farmers sell their homogeneous product at the market, enabling customers to easily compare prices.

Another example could be foreign exchange traders. The product is homogenous and there should be perfect information about the available prices.

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