What is market competition? Why is it important to understand it in terms of economics?
What is market competition?
Market competition is the process that reflects the trends of buyer and seller into the market. Market competition can also include the rivalry functions of the market that has used by the seller to achieve their targeted goals and to increase the overall sales volume of companies. It is very important to understand about the term of economics because economic and market trends are useful to evaluate the market equilibrium. The trend of sales and demand is useful to determine the prices of the product in the market. Moreover, the market competition is the process where the seller works to achieve the competitive advantage of working.
Simply, market competition is a condition where “buyers tend to compete with other buyers, and sellers tend to compete with other sellers.”In offering goods for exchange, buyers competitively bid to purchase specific quantities of specific goods which are available, or might be available if sellers were to choose to offer such goods. Similarly, sellers bid against other sellers in offering goods on the market, competing for the attention and exchange resources of buyers. As it is important to understand market competition in term of economics because, it is rivalry in which every sellers tries to get what other sellers are seeking at the same time : sales, profit, and market share by offering the best practicable combination of price, quality, and service. Where the market information flows freely, competition plays a regulatory function in balancing demand and supply. Since the competitive process in a market economy exerts a sort of pressure that tends to move resources to where they are most needed, and to where they can be used most efficiently for the economy as a whole. For the competitive process to work however, it is “important that prices accurately signal costs and benefits.” Where externalities occur, or monopolistic or oligopolistic conditions persist, or for the provision of certain goods such as public goods, the pressure of the competitive process is reduced.