Many economists believe the strict definition of perfect competition does not exist in real world. yet, this model is the point of departure in discussing the market structure. discuss why

The assumptions that a perfectly competitive market is based on do not exist in the real world. But this market form exhibits efficiencies which others don't. That's why it is used in studying market structure.

Explanation:

Perfect competition is assumed to have the characteristics that are not found in the real world. For instance,

1. A large number of buyers and sellers

2. No barriers to entry and exit

3. Homogenous products

4. Buyers have perfect knowledge

5. Firms are price takers

All these do not really exist in the real world. Firms produce differentiated products. There are a number of restrictions like high costs, licensing, etc. Buyers do not have perfect knowledge.  

But perfect competition exhibits both allocative as well as productive efficiency, while other market forms are mostly inefficient. That's why in studying market structure we start from perfect competition because it is the ideal case.

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