The market and the types of competition
Introduction
The topics set out in past reports deal with how supply and demand is moved according to the consumer income and price of the good, so it is necessary to expose as commercial activity varies in disposition of the number of producers and consumers.
Commercial activity is nothing more than the purchase and sale of goods – services, from the moment it began to exercise it has needed a place to interact with interested parties, this place is called “market”, the market allowsThe acquisition of a product, apart from being a physical/virtual space is not always the same, its structure is modified according to what is offered and demanded, when there is greater innovation and improvement of the product there are more demanding more demanding but byWhat happens?, There are several factors that encourage producers and in a market competition is the biggest motivator for improvement, competition is nothing more than a confrontation where the best is disputed according to their skills and resources, there are several types of competition,which we will present below, with a descriptive methodology.
The market and competition
The market is a physical and virtual space which aims. The object this medium is the exchange, that is, the purchase and sale of goods or services, as well as the exchange. The market price is defined depending on the demand and the supply, as well as the state can set the state or the bidders. There are various markets, so not everyone has the same structure, the company and the plaintiffs vary according to the goods.
Competition refers to the confrontation or dispute in which two or several individuals are involved who have a common objective. In the market the competition happens when there are several companies or individuals that offer a product in a specific market and consumers are the ones who acquire these products according to their preference. The competition in the market can be classified by levels according to how it influences the market, if it is able to control the price or attract demands that are interested in the good offered by specific aspects of the product. Next, we will see the most relevant types of competition in the market:
Perfect competition
The perfect competition happens when there is a large number of small businesses where the price is set by the market depending on the supply and demand, this happens because a homogeneous product is offered, which the plaintiff and the offering have a full knowledge of thegoods (the price, costs, among others) this causes advertising not to serve, so that companies do not stand out and do not have the power to change the price making them only decide the amount of production they will offer. To enter the market there are no tickets of entrances and exits.It is very difficult in real life to find this type of competition, because there are always imperfections, thus leaving this classification only a theoretical model that serves as a study, the agricultural market resembles this competition, but not its entirety.
Imperfect competition
This type of imperfect competition is the opposite of the perfect, in such a way that it fits the reality of the market and some companies have dominance over the price, there are several types of competition such as:
The monopoly
It is when there is only one company or individual (monopoly) in the market that negotiates the product (good or service) which has no substitutes, that is, there is only one offering and too many plaintiffs, so consumers have no other option wherebuy good, given to this the monopolist can control the price.
This type of competition is unfavorable for the country since a single company dominates the market and this could be lent so that significant abuses against consumers occur, in addition to the fact that there are no competitors as an incentive for improving the product making that market notInnove and there was no breakthrough in the country regarding good or service, it should be clarified that the company can improve if you want it but if there were competition, a constant improvement would be seen to get attracted to the consumer. The market entry barrier is very high that causes new companies to arise.
Oligopoly
This type of competition is similar to monopoly, but the difference is that there are more than one bidder negotiating the product, these offers are few companies that have control in the sector and that can be strategically interrelated to agree on prices or reduce production all thisIn order to obtain high benefits, when this happens, companies act as a monopoly, if a formal agreement is reached, it would be “cartel”, the poster is illegal in many countries but there are cases in reality that show that companiesThey make use of this treaty and although there are established fines, this agreement is still practiced to eliminate the competition . Products can be similar, but they have a very significant difference.
To enter a market with a competition of this type there are many barriers such as:
- Strategic barrier: Companies already established in the market with their advertising, reputation and promotions cause new competitors to not have the opportunity to position themselves in the market.
- Legal barrier: patents can make a product enter or not depending on whether it is similar or replicated by an existing one.
- Entrance barrier: To enter this market there are high investment rates, as well as in the monopoly.
- Output barrier: current contracts and compensation to employees produce a fixed output cost.
Monopoly competition
This competition happens when there are a large number of companies negotiating similar products in the market, which are not identical with the goods of other competitors, given that in the process to sell said good they add "added values" for example: advertising, the service duringThe sale and after -sales, area, packaging, among others, all this to improve the quality of the product or service. Companies use these mechanisms to highlight among their competences and get the consumer to be impossible to replace it, this market model is very frequent in real life. In this market where this type of competition is located there are no relevant entrances barriers for legal and technological reasons. An example of this can be clothing, producers always seek to innovate and improve clothing to overcome competition.
conclusion
In short, market competition is something completely necessary for us, as consumers, not to have to pay an excessive price for certain products, because thanks to this the price of that product will be reduced, thus finding a balance between supply and demand
The markets that exist in the economic environment are very numerous, and not all have the same organization regarding issues such as demand size, number of companies, advanced technology or existence of substitute goods. This great variety forces a categorization of markets to facilitate their study. The economic analysis differently differentiates them by the number of companies operating in them, so it also calls them industries or sectors: the greater the number of companies, the greater the competition in the market or industry, reciprocally. Competition can be classified by levels according to how it is influenced in the market, if it is able to control the price and number of consumers that attract. The imperfect competition is very located to reality and in the types that make it up we manage to visualize how companies can control the market, although currentTo notice monopoly competition which serves for growth and constant improvement of entrepreneurs to excel in the market, which brings benefits not only to consumers but to the nation.
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