Competition A Theory Of Competition Essay - 1644 Words

a. Theory of Competition Competition in the economic sphere denotes the process of rivalry between firms for the patronage of customers. The European Commission defines competition as a situation in which firms or sellers â€Å"independently strive for buyers’ patronage in order to achieve aparticular business objective, for example, profits, sales, or marketshare†7. Richard Whish refers to competition in the commercial world as â€Å"a striving for the custom and business of people in the market place†8. In this sense, competition is the equivalent of rivalry between firms; this rivalry may be in different forms such as for price, service, or a combination thereof, or other factors. Competition is at the heart of the market-based economy. The debate about the relative merits of a market-based economy versus a state-controlled, planned economy that raged for decades seems to have been broadly settled in favour of the former. Countries across the globe are reforming their economies, and undertaking privatization and deregulation. As they do so, the forces of competition come increasingly onto the centre stage of the economy. Competition is the process by which sellers strive to gain the patronage of buyers in achieving their primary objectives of increased sales, larger market shares and greater profits. Sellers are more likely to attract and retain buyers if the quality of their goods or services is higher and the prices lower than those of their rivals, or if they are innovative inShow MoreRelatedCompetition Policy : Theory And Practice1477 Words   |  6 Pages Market Power 1. Introduction With the development of economics, market power is a heated topic. Motta (2005) states that market power refers to the ability of firms to set prices above marginal costs in the book called Competition Policy: Theory and Practice. George A. Hay thinks â€Å"The modern concept of the market power focuses on the potential for consumers to suffer injury through the actions of a single firm or a group of firms acting in concert†(1991) in his essay about market power in antitrustRead MoreArgument Against Perfect Competition Theory Essay1551 Words   |  7 Pages0 Argument against Perfect Competition Theory Theory of perfect competition has severe shortcomings that limit its application in business. Generally, its assumptions fail to hold in the real world, which makes the theory implausible as discussed below. Firstly, it assumes that buyers and sellers are price takers in the market. As such, it presumes that there are many buyers and sellers that are insignificant and equally small for the conditions of perfect competition to exist. However, in eachRead MoreThe Theory And Monopolistic Competition Minimum Wages1926 Words   |  8 Pagesunemployment and give less chances to young people to find a job. However, according to oligopolistic theory and monopolistic competition minimum wages will eventually lead to higher employment, rather than the opposite. This view will be carefully discussed and analysed in this paper with empirical evidence. Oligopsony is described as a market with few buyers, while monopsonistic competition is â€Å"an oligopsony with free entry, so that employer profits are driven to zero†. Two great examples ofRead MoreUsing Oligopsony Theory And Monopsonistic Competition2001 Words   |  9 Pagesa labour market. However it is unrealistic due to the existence of competition between employers. In contrast, it is more appropriate to model the labour market as under â€Å"oligopsony† and â€Å"monopsonistic competition†. Bashkar, Manning and To (2002, p 156) define Oligopsony in labour market as: â€Å"Oligopsony describe a situation where employer market power persists despite competition with other employers† For monopsonistic competition, it describes the condition which oligopsony has free entry or exitRead MoreUsing Oligopsony Theory And Monopsonistic Competition1047 Words   |  5 Pagesunrealistic due to the existence of competition between employers. In contrast, it is more appropriate to model the labour market as under â€Å"oligopsony† and â€Å"monopsonistic competition† situation. Bashkar, Manning and To (2002, p 156) define Oligopsony in labour market as: â€Å"Oligopsony describe a situation where employer market power persists despite competition with other employers--the number of employers does not need to be small.† For monopsonistic competition, the term describes the condition whichRead MoreGame Theory Is The Study Of Decision Making Under Competition1289 Words   |  6 PagesGame Theory is the study of decision making under competition. More specially, Game Theory is the study of optimal decision making under competition when one individual s decisions affect the outcome of a situation for all other individuals involved. Game Theory can be broadly classified into four main sub-categories of study: - Classical Game Theory - Combinatorial Game Theory - Dynamic Game Theory - Other Topics in Game Theory As a mathematical tool for the decision-maker the strength of gameRead MoreTraditional Trade Theory, New Economic Geography Theory And The Interplay Between Globalization And Competition1602 Words   |  7 PagesThis study identifies four strands of thought that outline the factors which can lead to the over-concentration of services; traditional trade theory, new trade theory, new economic geography theory and the interplay between globalisation and competition. It is from this four factors in which the negative effects of the over-concentration of services are created. These negative effects will be discussed and analysed in a bid to understand what can done to reduce them. Polycentricity and territorialRead MoreThe Pharmaceutical Industry with Reference to Key Strategy Theory, Analyse and Evaluate the Changing Nature of Competition Within the Global Pharmaceutical Industry1996 Words   |  8 PagesThis essay will analyse the factors that shaped the competition within pharmaceuti cal industry. It will look at the key players in the market and try to answer how they obtained the competitive advantage over their rivals. Moreover his paper will also examine the main business models in pharmaceutical industry and look how the companies react to the changing nature of competition, by re-assessing their strategies. According to the case, written by Holland Batiz (2004), the pharmaceutical industryRead MoreThe Strength of Competitive Analysis905 Words   |  4 PagesOUTLINE INTRODUCTION: Competition Theories Compete It is never doubted by academic circles and business environments that the strength of competitive analysis, if not the top, is one of the most important critical success factors in creating and managing marketing strategies. The way a business adapts to competitive environments, characteristic of its focus being self-centered, competitor-centered, customer-driven or market driven (Day and Nebugandi, 1994), will define its placeRead MoreA Research Study On An Academic Research Essay1658 Words   |  7 Pages1.0 Introduction An academic research involves a comprehensive investigation of theories, principles and decisions criteria among other study materials with an aim of identifying facts and drawing conclusions. Ultimately, there are lots of benefits associated with research in learning as well as in solving real life problems. For instance, it allows for knowledge building through evaluation of existing theories (Webb, 2007). In this case, the researcher is exposed to research work conducted earlier