A nit pick: you're describing something more like perfectly competitive markets through to monopolistic competition. The efficient market hypothesis is that th

A nit pick: you're describing something more like perfectly competitive markets through to monopolistic competition. The efficient market hypothesis is that the prices offered for purchase and sale factor in all relevant information about the thing being traded. It's less about whether that good is "better" or "worse" than a substitute, more about what information is revealed by prices.