What defines a market's freedom of entry and exit, often referred to as "pure competition"?

The concept of "pure competition," or a market characterized by freedom of entry and exit, is fundamentally tied to market structure. In a purely competitive market, there are no barriers that prevent new firms from entering the market or existing firms from exiting. This means that if firms can earn a profit, new entrants can come in to take advantage of those profits, driving the market toward equilibrium. Conversely, if firms are incurring losses, they can exit the market without significant hindrance, ensuring that resources are efficiently allocated and that the market remains dynamic.

The characteristics of market structure, including the number of firms, the nature of the products offered, and the level of competition, define how easily agents can move in and out of the market. In contrast, market regulation pertains to government-imposed rules that can either facilitate or restrict entry and exit, while market power refers to the ability of firms to influence prices, which is less about the actual freedom to enter or exit and more about control within the market. Market accessibility is a broader term that may cover aspects of market entry, but it doesn't specifically encapsulate the defined characteristics of pure competition as effectively as market structure does.