Rivalry Among Competitors: Economic Competition
Economic competition is one of the most important factors in which businesses can have an effect on one another and the economy. It involves competitiveness or rivalry among sellers to try to acquire more money and sell the best product; with the best quality. Due to a free market, the services and prices of the company vary from each company to meet the interest of their customers. In addition, to gain more customers than the opposing rivals in the business, the competition provides businesses with a number of benefits. For example, the action to compete with one another in order to get more customers and a high profit, which increases product variety and productivity as well as manufacturing. The importance of economic competition is very essential in order for the stability of the economy.
Rivalry Among Competitors
Economic competition has been and continues to be an efficient and effective way in which states can interact with one another. Rivalry among competitors influences competition by businesses by competing with one another to be the best in the market and have a greater impact on society as being a prosperous seller of that product. Customers influence businesses in numerous ways. One might be that of a business that seeks to get the attention of people in order for that business to continue to grow and succeed. Another way customers might influence businesses could be the way the business owner chooses to advertise the product to meet the interest of the people in order for the product to be purchased. In order for the economy to be stabilized, the economic competition has proved to be very essential and important.
There are five major types of market systems in economic competition. Each impacts economic competition in a way. The first type is defined as having an infinite number of sellers and buyers. This market type is known as perfect competition. There are countless businesses in the market so a perfect competition makes it almost impossible for any individual to alter or change an existing price in the market, nonetheless, if it is done, the businesses have infinite alternatives to this.
The second type of competition in the market system is a monopoly. A monopoly is the opposite of perfect competition. They involve one individual who is selling their product and has no close substitute. The unique product is produced or created by the seller. The fact that there is no other product like it means the seller is able to choose whatever price they would like to sell it for and there will not be any competing businesses due to the lack of competition within that market. Although the seller does have free will to set the price to a number of options, it would not be beneficial to set the price at an unreasonable or outrageous amount since the company depends on the customers. The majority of customers will pay what seems fair to them and if the business can attract a great amount of people and persuade them to buy that product, the total revenue will be impacted for the better.
The third type of competition in the market system relates to a monopoly but has a primary difference. It is called an oligopoly. Rather than having only one seller of a specific product, there is a small group of producers and sellers. Although they are not able to choose from the large range of prices as in a monopoly, oligopolists will cooperate together in a secretive and unlawful way to gain an advantage over others. This is not regulated by the government, however, businesses in both monopolies and oligopolies collude.
The fourth competition in the market system is monopolistic competition. This market system includes the competition type of perfect competition and monopoly. Similar to perfect competition, in monopolistic competition, there are numerous competing businesses in the market. However, this type of competition differentiates from the others because each competitor is able to charge greater prices than the rival due to them being different but in the same type of business. An example could be a shoe business. There are many different styles and brands of shoes and they are recognized to be different, so no company is exactly the same.
The fifth and last type of competition in the market system is known as monopsony. This type of competition is similar to the monopoly in the market system because there is only one individual who is the buyer of the product but differs because there are many sellers. The individual who is the buyer of the product has the authority and power to determine the price of the product being sold.
With each competition type in the market brings many advantages. Moreover, to continue to compete economically is overall beneficial. Although there are disadvantages to economic competition, that advantages outweigh the disadvantages. The advantages might be brought about by the customers or the sellers and could have a lasting impact on the competing businesses in the market. The impact could go an infinite number of ways. From closing a business to contributing to making it prosper goes along with how states interact within the competition. Economic competition is an efficient system between states and their interactions to run effectively and smoothly. In some cases of competition, advantages may belong to the customers, however, in other cases, the businesses might benefit more.
Advantages
There are many advantages to economic competition. For instance, it keeps the company or business up to date with the newest trends and allows them to improve. Also, supply and demand are balanced because of the needs and wants of customers to make sure they are always met to satisfaction based on the quality of a product. The products will grab the attention of the customers because they are contemporary and at more affordable prices compared to the competition. On the other hand, one could have a better quality product and raise the prices because the demand will be higher for a product that they can’t get anywhere else.
The key factors to a perfect competition relies on winning the customers over and gaining their loyalty. In order to do so, you have to produce a quality brand that is better than the competition. For example, if you have the best bread then your customers will buy your bread. Factors for customers deciding whether to choose you or your rivals are based on three things. The first thing is the price, regardless of what your product is the price will always be the deciding factor to buy the brand or not. The second selling factor is the quality and detail of the product. If you have the best product for the best price then there will be no competition. Thirdly, customer service and consistency. Customers want a guaranteed quality product because they spend their hard-earned money on it. Furthermore, they will always expect for new products to have the same quality and standard that the previous ones did. Customers value quality and consistency.
Many advantages come into effect because of economic competition. For example, businesses may have the advantage to win over customers. When businesses begin to sell their product, they may place their store in an efficient location where people are lively and might live close to that store. This no doubt draws attention to that community and people’s curiosity influences them to seek out the new-opened business. However, if a nearby store opens up selling similar products, the businesses may have to be aware that there are other competitors in the race, so they might increase the quality or lower the price of the product in order to continue to have people choose to go to their store instead of an opposing one. When competition is effective within the companies economically, it provides companies to want to be on top and continue to stay that way. In effect, this promotes new ideas to be founded and products to be up to date with this modern and fast-paced world.
On the other hand, nevertheless, customers may have an advantage over the businesses. In order for a business to thrive, it needs to be able to attract customers. Consumers are the biggest motivation for businesses to advertise and promote a product in a specific way. For this reason, if consumers are not drawn to the product, sales will decrease. Decreasing sales leads to money the business is losing which leads to the money the business owes but cannot pay to the other companies they may be trading with. Eventually, the business could go into debt and, in effect, the business could suffer a closure and there will be no business. The customers make decisions based on which business has the better quality or the better price.
There are numerous choices for people to determine what they spend their money on, so this will force businesses into making decisions such as improving the products' quality or quantity and drawing more eyes toward it. Another way to get the customers' approbation is by reducing the cost of the product, therefore, making it more beneficial to the customers. It also encourages business opportunities for citizens and new and improved jobs that many may be seeking.
An advantage to gaining customers' approval, too, is the financial aspect. If a business is successful, not only will the business owners be rapturous, but the consumer will be delighted to have found a product that they trust and will continue to buy that product as long as the quality and endorsement are great. It is a win-win scenario. Companies spend a lot of money to produce ads and commercials to endorse their products to get customers to buy them.
Disadvantages
In economic competition, many people create new and improved ideas everyday; so in order for businesses to stay active and continue to bring in customers, that company must show the importance of the product. Although it may sound easy, there are many disadvantages to competition. The more the competition, the less business a company is receiving. Businesses might have to fight to offer their services to people. They might try to outnumber the rival business to try to put them out of business, however, doing so is difficult. Sometimes, this may lead to unnecessary closings of businesses, and because of majority rules, a small business could suffer closure.
Another disadvantage to economic competition is the supply and demand of a product. This includes the amount of material or agricultural product that is a necessity to manufacture the product. It also included the assistance of others and their time, and the customers interested in the product and purchasing it. For a business to continue to run in an efficient way, the most essential part is bringing in a sufficient amount of money to provide for the workers, materials, and goods. If done correctly, the disadvantages decrease while the advantages increase. However, if a business continues to produce and manufacture large amounts of the product and begins to create an overabundance of the products, that business can fall into serious dilemmas.
In March of 2017, the percentage of small businesses was estimated as around 20% of businesses fail during the first year of opening. As the years increase in the business, the percentage of closures of businesses increased. During a small businesses’ fifth year, the businesses do not survive, rather, the numbers skyrocket to 50% of failing businesses and then to an outrageous 70% fail in the tenth year of a business staying open. As inventory increases and overflows, the financial strength is weakened. There might be a deficit of money because customers slowly dwindle in buying the product and the company then goes into debt.
The Bill of Rights served the purpose of protecting American rights by the Federal Government that later helped shape the Fourteenth Amendment. The Fourteenth Amendment involves a clause that is known in history as Due Process. Due Process is a law that requires all states to respect the legal rights given to a person. Each and every company shall freely decide to enter the market and how they would like to run their business. It is a protection for every American citizen’s rights that is provided for them. Not only do companies have free will to do run their business however they choose, but the people who are deciding where to shop and spend their money also have the free will to pay their money to particular businesses. This protection goes along with economic competition because although the American rights are given to all; this does not mean that a business does not have to abide by the legal and regulatory restraints.
Restraints
Economic competition can also be limited by regulations and constraints by the government. The biggest drawbacks or disadvantages in the economic competition are the restraints. In fact, decisions based on economic competition are widely considered on the restraints and limits before the company can decide whether they want to sell a product or not. Restraints can persuade an individual to act on a decision that is in accordance with the law within limitations. These restraints include both legal and regulatory restraints that affect the actions and decisions being made by businesses and their consumers.
Legal restraints involve laws and rules placed on companies. Competition restraints such as the restraint of trade is another disadvantage for businesses in economic competition. Restraint trade involves the act of eliminating the competition with common businesses and interfering in some way with the competing companies. Legal restraints placed on businesses as a restriction might include acts such as if a business were to prevent another business from continuing to buy and sell products. Restraints are placed on a businesses’ freedom to continue to run. One example could be that of two businesses working together to make it their aim to put a specific company or business out of order. This action is illegal and sets a restraint on all economic competition. Monopolies in a business are illegal. One lone company cannot own all enterprises for a product or service.
Another common restraint might be that of creating a monopoly market. In a monopoly, the business is usually a unique and distinctive product being sold by an individual. That business faces no competition within the market and is an individual who creates of produces a special product unlike anyone else. Many contributing factors put restraints on businesses trying to enter the market and sell their product. One example is obtaining a government license. These government licenses are permits given to a company or an individual in order to manage the business. The local government issues permit to those starting a business in order to get authority to run the business.
Another restraint might be placed on the company’s need to acquire a patent, copyright, or trademark issued to that company by the United States Patent and Trademark Office, otherwise known as USPTO. This property right is given in order that people do not steal another product and try to sell it. A copyright’s power allows the individual that is selling the product to present and advertise it to the public in a way of the seller’s choosing. Creating and inventing new products and advancing with technology is helped to be enforced because instead of an individual trying to copy from someone else, it encourages individuality and originality. The patent law motivates individuals who are beginning a business to bring new ideas to the public’s attention and in exchange, the businesses attain specific exclusive rights. Also, the owner of the company has the freedom to produce whatever service or product they want. An advantage to having a business in the monopoly market helps the business owner with making it beneficial to be able to set their own prices and choose how they would like to distribute the product. When a business chooses their own price, it is better to have sound judgment and be reasonable with the price in order to get people to consider buying the product.
In economic competition, there are also restraints known as regulatory restraints or restraints put on the relationship between economic regulations and competition laws. There are numerous aspects on this relationship and how they relate to each other. There is the concept of competition regulation laws, the removal of regulations or restraints, and the distribution of power within competition agencies. There are specific legal powers that are crossed between economic regulations and competition laws.
Economic competition is still relevant today. There are many current news articles relating to how states interact with one another and how American states use competition when operating together. The regulations and legal restraints placed on economic competition influence businesses and individuals in the modern world and will continue to have an impact on society.
In 2016, the United Kingdom conducted a vote and decided to leave the European Union. As of 2017, Donald Trump was elected as President in the United States of America. He believes in the “America First” statement and deals first with the United States' national interest. The battle continues on with Britain and the United States and the need for a new trade deal is brought out. Britain being the only one to import more goods than exports to the United States raises the argument that American companies could sell more goods by initiating a new trade deal that would, in effect, create more jobs in the United States of America and also satisfy the consumers in Britain. There have been ongoing problems between the European Union and America. Working alongside one another does not seem optional and Britain is caught in the middle. They have not yet found a clear path to go down yet. Trade opportunities and the political stability at stake and the trading models and relationships between the United States and the United Kingdom have very opposing views on matters. The deals between the United States and the United Kingdom would put their focus toward achieving maximum economic competition and market access. The models concerning the trade deal would show how competition promotes the development of the best products entering the market in an efficient and effective way. The more diverse and unique the products are the more attraction from people the product will draw creating beneficial results. In order for the trade deal to go into effect, everyone needs to be on board and Trump has to put action into making the trade deal with Britain.
In conclusion, the economic competition has proved to be a key way in which states interact with one another. The way economic competition operates between American states includes the five types of competition in the market system including perfect competition, monopoly, oligopoly, monopolistic, and finally, monopsony. There are both advantages and disadvantages to economic competition, however, the advantages are more clearly seen and overpower the disadvantages to economic competition. Economic competition is continuing to be relevant today and an effective way for not only American states to interact with one another but also, in an economic sense. As was brought out, all economic competition ties closely together with the unity and interactions between the states and the products being sold, and how the business can flourish. It is very important to continue to stay on top of the modern world and be acquainted with one another operating through competition. Economic competition is a successful way of operating with one another and, hopefully, will continue to be successful in the years to follow.
