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The Importance of Competition

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In economics , competition is a condition where different economic firms [Note 1] seek to obtain a share of a limited good by varying the elements of the marketing mix : price, product, promotion and place. In classical economic thought, competition causes commercial firms to develop new products, services and technologies, which would give consumers greater selection and better products. The greater selection typically causes lower prices for the products, compared to what the price would be if there was no competition monopoly or little competition oligopoly. The number of buyers within the market also factors into competition with each buyer having a willingness to pay, influencing overall demand for the product in the market. The extent of the competition present within a particular market can measured by; the number of rivals, their similarity of size, and in particular the smaller the share of industry output possessed by the largest firm, the more vigorous competition is likely to be. Early economic research focused on the difference between price- and non-price-based competition, while modern economic theory has focused on the many-seller limit of general equilibrium. Neoclassical economic theory places importance in a theoretical market state, in which the firms and market are considered to be in perfect competition. Perfect competition exists when all criteria are met. These criteria include; all firms sell an identical product, all firms are price takers, market share has no influence on price, buyers have complete or "perfect" information, Resources are perfectly mobile and firms can enter or exit the market without cost. Price Dispersion Competition And The Role Of.

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Wild market Price Dispersion Competition And The Role Of can feel like an out-of-control blaze: The more it expands and the hotter it gets, the more havoc it can wreak.

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