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Quote 866

“The only unfailing and permanent source of improvement is liberty, since by it there are as many possible independent centres of improvement as there are individuals.

   --  John Stuart Mill

Quote 1014

"Competition is not wasteful duplication. In competition,  producers jostle to provide goods with different prices and  qualities in the hope of discovering what buyers value most.  This drives innovation and progress.  Competition therefore works only because it is not perfect –  because different producers, products and consumers are all  different, not identical.  Profit therefore has an important social role, inducing  entrepreneurs to strive to produce what the public most want."

   --  Dr Eamonn Butler

In business there are three main types of market structure 
  • Monopoly - 1 seller
  • Oligopoly - Few sellers
  • 'Perfect' competition - Many sellers
Competition means lots of duplication, why does competition work?
  • A lot of business is trial an error, more competitors means more trial. 
  • Business competition lowers the economic power of the firms, forcing them to be leaner and more efficient.
  • Competition creates downward price pressure.
  • Competition creates competition for customers, bringing services to difficult to service areas.
  • Competition reduces companies being complacent.
  • Competition is the best regulator
Some people claim that competition uses more resources, producing many variants of products where only one is needed. It doesn't work that way because people have different tastes and values and prefer different products
Even in cases where competing products are very similar, competition forces producers to keep quality high and prices keen.
If their customers can desert them for other producers, they have to pay continual attention to refinements and improvements, or risk losing their market share. Competition uses resources more efficiently, not less. It continually steers resources towards those who are good at satisfying their customers' needs, and away from those unable to provide them with goods of the quality and price that they seek. Those good at it usually prosper and expand; those who can't satisfy demand lose out. 
Without competition the consumer has little power. Producers can deliver indifferent quality and prices bloated by inefficiency, and still survive because consumers have no one else to turn to. Competition forces producers to attend to consumer needs and to improve both quality and value.