In many considerations, also in financial theory, an ideal picture with essentially the following properties, namely – there are no preferences, neither personal (individual preferences: the market participants have no preferences over partners), nor temporal (the good is available to all market participants at the same time), nor spatial (spatial preferences: all suppliers and demanders are in the same place at the same time), – the traded goods are homogeneous, i.e. completely indiscriminate in all parts with respect to any other quantity, – the individual market participants in competition overlook supply and demand: there is complete market transparency, and – the suppliers and demanders act infinitely fast: they adapt immediately to changes in market conditions. – If even one of these assumptions is not true, the market is imperfect. From the imagined processes on the perfect market, economic theory tries to better understand what happens on the real, imperfect markets. – See allocation, market discipline, market forces, market mechanism, net welfare loss, competition.
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University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec.
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