© 2009 Pearson Education, Inc. Publishing as Prentice Hall Principles of Economics 9e by Case, Fair and Oster
Allocative Efficiency and Competitive Equilibrium
Perfect Competition Versus Real Markets
We have built a model of a perfectly competitive market system that produces an efficient allocation of resources, an efficient mix of output, and an efficient distribution of output. The perfectly competitive model is built on a set of assumptions, all of which must hold for our conclusions to be fully valid.
These assumptions do not always hold in real-world markets.