Importance of Market Competition

The importance of the Competition Market resides in that bliss competition is completely necessary to regulate the market. Without such market competition, we would surely encounter unwanted interventions, for example those of the government. In others words, market competition is essential to achieve a situation of free market.

He free market assures us that the price of goods is not agreed by a few. On the contrary, the coexistence of competition within the same market makes sellers and consumers regulate the price of these goods, this receives in economics the name of the law of supply and the demand.

If there is market competition, the price of the offer will be regulated, since the consumer will have much more to choose from.

For this, it is essential that we find what is called the Perfect Competition Market. In this type of competition, companies are in charge of regulating the price together with the consumers, as they compete with each other in the market, each offering qualities that can differentiate them. While some will opt for a competitive price, others will opt for more quality in their products. This differentiation makes competition between companies fair, thus leaving the final choice to the consumer.

However, we can also find another type of less attractive market that would throw the previous one to the ground. It is known as the Imperfect Competition Market.

In this type of market, the price, or the conditions of the product in general, is somehow manipulated, either by a single person (company) or by a few. Thus, within what we know as the Imperfect Competition Market we can find monopolies, when only one company is covering the offer of a product or service.

We can also find oligopolies, which is exactly the same as before, but with two or three companies sharing the cake.

In this case, even though we are in a society Free Market and the government should not intervene, it would be necessary for it to do so, since both oligopolies and monopolies make the entire self-regulating system difficult.

Thus, as we see, the Market Competition is absolutely essential so that we, as consumers, do not have to pay an excessive price for certain products. Well, thanks to it, the price ceiling of that product will be reduced, thus finding a balance between supply and demand.