Perfect competition describes a theoretical market where supply and demand are met at the right price, and where there are many identical suppliers competing with each other to provide the best product to customers who are aware of and understand their choices. In perfect competition, the price of an item is kept at a price that reflects the supply and demand curves. Imperfect competition describes markets that have not found this balance (all those that exist in the real world), and where prices are somewhat controlled by competition, but also are set by things like a lack of serious competitors, government regulations and a lack of customer knowledge.