Dynamics of Competition and Competitive Market Processes

Dynamics of Competition and Competitive Market Processes

It is wrong to assume that competition is good, and the monopoly power is bad. The reality is much more complex than that as we shall see when we analyze and assess the competitive markets where the minus existing companies and real market power in setting prices for consumers.
But there does not seem that there is a consensus that the increase in the amount of competition in the market can result in side effects positive not only for consumers but also for society as a whole. In this section we consider briefly some of the effects of competition within the market - and come back to it when we look at the nature of the markets and the effects of appeal ..

Adam Smith on Competition

"Normal price or the price of free competition ... is the lowest that can be taken. [Which] is the lowest that sellers can normally be taken at the same time continue their business."
Adam Smith, Wealth of Nations (1776), the first book, Note VII

Common characteristics of markets that are considered to be a "competition" are: ..

v  Lower prices due to the large number of competing companies. Suppliers meet the demand curves and flexibility, any rise in prices will lead to lower demand and total revenue. The cross-price elasticity demand for one product with respect to a change in other prices are high, indicating that consumers are willing to switch demand for most products at competitive prices in the market place. : ..

v  Low barriers to entry - you will find the new companies is relatively easy to enter the markets if they feel there is an abnormal profit in this regard. Entry of new firms provide competition and ensure to keep prices low in the long term.

v  Lower gross profits and lower profit margins than in markets dominated by a few companies.

v  Activity of the largest projects - the Austrian School of Economics argues that the real competition is a process, not a static condition. Competition and continuing to improve, there must be a genuine desire on behalf of the business to engage in competitive behavior, innovation and invention to drive the market forward and creating the so-called Joseph Schumpeter's famous "winds of creative destruction."

v  Lower gross profits and lower profit margins than in markets dominated by a few companies. "

v  Activity of the largest projects - the Austrian School of Economics argues that the real competition is a process, not a static condition. Competition and continuing to improve, there must be a genuine desire on behalf of the business to engage in competitive behavior, innovation and invention to drive the market forward and creating the so-called Joseph Schumpeter's famous "winds of creative destruction."

v  Economic efficiency - and to ensure that competitors attempt to reduce costs, and move toward production efficiency. The threat of competition leads to a faster pace of technological diffusion, and the companies do not particularly respond to the changing needs of consumers. This is known as dynamic efficiency "

The gains from greater competition

"Competition is a process, which in the long term and short term, it may look very different, which allows companies to use a variety of weapons - not just the price - of the competition. Innovation, product design and variety are often important parts of the game of competition between the companies"

The gains from greater competition

"" Is the process of competition, which in the long term and short term, it may look very different, which allows companies to use a variety of weapons - not just the price - for competition and innovation, product design and variety are often important parts of the game of competition between the companies "

The importance of non-price competition

In competitive markets that are not fully competitive, and often is the effectiveness of non-price competition, which is critical in gaining sales and ensure the protection and promotion of market share.

Panini Peddlers, Baps, Baguettes and Bagels - Product Differentiation in the Sandwich Market

According to the British sandwich industry, and is purchased 1.8 billion worth of sandwiches out of the house each year, and retail sandwich market worth almost £ 3.5 billion more than three times the value of the pizza market, for example. About one million consumers buy sandwiches five days a week. Industry employs more than 300,000 people, and if the latest collections of consumers to believe, probably the person in front of you in the queue for BAP, wrap or baguette is likely to be male, between 25-44, as well as in a rush - lunch break we have now is an average of less than thirty minutes! We have the largest supermarkets to shop the smallest corner; makers sandwich dedicated staff who deliver direct to offices in the cafes and bars, sandwich independent petrol stations in bars and chains to local and national bakers, and many suppliers competing in the industry are fighting a daily battle of revenue, sales and market share ..

Differentiating the product

Here are some ways in which to make the humble sandwich distinct against its competitors in the market place: ..

v  Hot and cold sandwiches

v  Different styles – e.g. a bap, baguette, wraps and filled bagels

v  Speciality breads such as focaccia and ciabatta

v  Product range – including

v  Organic ingredients

v  Healthy options (e.g. non-mayo)

v  Packaging and branding

v  Quality of ingredients

v  Different fillings

v  Made to order in the store / off the shelf / home or work delivery of sandwiches

v  Finest range / value sandwiches

Issues in the market price, but perhaps not to the degree that people expect. According to research from analysts Winship food ", are not consumers in the United Kingdom paid for a sandwich and they are always more interested in perceived value for money and will pay more for a product they believe to surrender rather than shop around for cheaper deals."