What is Competition?

The existence within a market for some good or service of a sufficient number of buyers and sellers such that no single market participant has enough influence to determine the going price of the good or service is known as Competition . It is opposite of monopoly.

Any person or entity which is a rival against another. In business, a company in the same industry or a similar industry which offers a similar product or service. The presence of one or more competitors can reduce the prices of goods and services as the companies attempt to gain a larger market share. Competition also requires companies to become more efficient in order to reduce costs. Fast-food restaurants McDonald's and Burger King are competitors, as are Coca-Cola and Pepsi, and Wal-Mart and Target.

"Competition" is one of those simple words which are common in everyday speech. We all assume we understand what it means, but when we try and explain it, it starts to present problems. Ask yourself what benefits you think you get from
competition as a consumer. Suppose you think in terms of being able to buy from different suppliers, and being able to choose from a variety of different but broadly similar goods - for example choosing shoes of different style, sizes, quality and price ranges. Perhaps you think of having some power as a consumer to bargain over price, or awareness that some suppliers will charge lower prices than others. Notice that the word that recurs constantly when most of us think about competition is choice. You and I, as consumers, value the ability to choose between a range of goods, different prices and different standards of quality and service.

Because of the buyer's ability to choose and apply pressure on prices, we expect competition to oblige producers and distributors to use their resources efficiently and keep  production and distribution costs low. Competition is usually thought to be a very powerful force to ensure production efficiency.

Competition is thus widely believed to be a desirable feature of market. Most of the major modern market economies have legislation and institutions concerned with preserving or increasing competition.

However, there are variations in the degree of competition in different types of market, and this can have a significant impact on issues such as price, costs and market share.

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