ABSTRACT
Given the importance of the traditional theory of competition as a central model of economic theory and as a reference for policy decisions, it is necessary to identify which are the critical assumptions and the essential implications of this theory. Atomistic competition cannot be conceived other than concerning a 'perfect market': a market where information is perfect, ensuring a single price for each of the goods that are perfectly substitutable. Competition is defined by its 'atomistic' nature: Each seller or each buyer is of negligible importance in relation to the whole market of a given good. To understand the scope of the traditional theory of competition, it is convenient to use the usual instruments of microeconomic analysis. General economic equilibrium and optimum, as they can be defined from the assumptions of the model, have become the standard against which the working of an economy should be judged.
