The shoe industry is one of perfect competition. Perfect competition: signs and distribution. Demand for a competitive seller's product. Markets close to pure competition

Perfect Competition

Model Plot

Perfect, free or pure competition- an economic model, an idealized state of the market, when individual buyers and sellers cannot influence the price, but form it with their contribution of supply and demand. In other words, this is a type of market structure where the market behavior of sellers and buyers is to adapt to the equilibrium state of market conditions.

Features of perfect competition:

an infinite number of equal sellers and buyers
homogeneity and divisibility of products sold
no barriers to entry or exit from the market
high mobility of factors of production
equal and full access of all participants to information (prices of goods)

In the case when at least one feature is absent, competition is called imperfect. In the case when these signs are artificially removed in order to occupy a monopoly position in the market, the situation is called unfair competition.

In some countries, one of the widely used types of unfair competition is the giving of bribes, explicitly and implicitly, to various representatives of the state in exchange for various kinds of preferences.

David Ricardo revealed a natural tendency in conditions of perfect competition to reduce the economic profit of each of the sellers.

In a real economy, the exchange market most resembles a perfectly competitive market. In the course of observing the phenomena of economic crises, it was concluded that this form of competition usually fails, from which it is possible to get out only thanks to external interference.

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See what "Perfect Competition" is in other dictionaries:

The idealized state of the commodity market, characterized by: the presence on the market of a large number of independent entrepreneurs (sellers and buyers); the opportunity for them to freely enter and leave the market; equal access to ... ... Financial vocabulary

- (perfect competition) The ideal state of the market, in which there are many sellers and buyers with equal access to information, so that each of them can act as a person who agrees with a given price, and is ready to sell and receive any ... ... Economic dictionary

See Perfect Competition Glossary of business terms. Akademik.ru. 2001 ... Glossary of business terms

PERFECT COMPETITION- (perfect competition) (Political economy) the concept of an ideal type of free market in which (a) there are many buyers and many sellers, (b) commodity units are homogeneous, (c) the purchases of any buyer do not noticeably affect the market ... ... Big explanatory sociological dictionary

Perfect Competition- 1) the functioning of the market mechanism in the presence of a large number of sellers, high quality of goods, no restrictions on new production in conditions of full awareness of consumers and producers about market conditions. ... ... Dictionary of Economic Theory

perfect competition- competition between producers, sellers of goods, which takes place in the so-called ideal market, where an unlimited number of sellers and buyers of a homogeneous product are represented, freely communicating with each other. Really like this.... Dictionary of economic terms

- (see PERFECT COMPETITION) ... Encyclopedic Dictionary of Economics and Law

Perfect Competition- Idealized market conditions, in which each market participant is too small to influence the market price of shares by their actions ... Investment dictionary

Perfect Competition- type of market, characterized by the presence of a large number of sellers offering homogeneous products; each individual seller cannot have any influence on the market price of products; free access to the market... Economics: glossary

Perfect Competition- a type of rivalry in the market of homogeneous products, where there are many sellers and buyers, and none of them individually can influence market prices and does not have full knowledge of the state of the market ... Dictionary of economic terms and foreign words

Books

A set of tables. Economy. 10-11 grade (25 tables), . Human needs. Limited economic resources. factors of production. Types of economic systems. Demand. Sentence. Market balance. Types of property. The company and its goals...

The market economy is a complex and dynamic system, with many connections between sellers, buyers and other participants in business relations. Therefore, markets, by definition, cannot be homogeneous. They differ in a number of parameters: the number and size of firms operating in the market, the degree of their influence on the price, the type of goods offered, and much more. These characteristics define types of market structures or otherwise market models. Today it is customary to distinguish four main types of market structures: pure or perfect competition, monopolistic competition, oligopoly and pure (absolute) monopoly. Let's consider them in more detail.

The concept and types of market structures

Market structure- a combination of characteristic industry features of the organization of the market. Each type of market structure has a number of characteristics that are characteristic of it, which affect how the price level is formed, how sellers interact in the market, and so on. In addition, the types of market structures have varying degrees of competition.

Key characteristics of types of market structures:

the number of sellers in the industry;
firm sizes;
number of buyers in the industry;
type of goods;
barriers to entry into the industry;
availability of market information (price level, demand);
the ability of an individual firm to influence the market price.

The most important characteristic of the type of market structure is level of competition, that is, the ability of a single seller to influence the general market situation. The more competitive the market, the lower this possibility. Competition itself can be both price (change in price) and non-price (change in the quality of goods, design, service, advertising).

Can be distinguished 4 main types of market structures or market models, which are presented below in descending order of the level of competition:

perfect (pure) competition;
monopolistic competition;
oligopoly;
pure (absolute) monopoly.

A table with a comparative analysis of the main types of market structures is shown below.

Table of the main types of market structures

Perfect (pure, free) competition

perfect competition market (English "perfect competition") - characterized by the presence of many sellers offering a homogeneous product, with free pricing.

That is, there are many firms on the market offering homogeneous products, and each selling firm, by itself, cannot influence the market price of this product.

In practice, and even on the scale of the entire national economy, perfect competition is extremely rare. In the 19th century it was typical for developed countries, but in our time, only agricultural markets, stock exchanges or the international currency market (Forex) can be attributed to markets of perfect competition (and even then with a reservation). In such markets, a fairly homogeneous product (currency, stocks, bonds, grain) is sold and bought, and there are a lot of sellers.

Features or conditions of perfect competition:

number of sellers in the industry: large;
size of firms-sellers: small;
goods: homogeneous, standard;
price control: none;
barriers to entry into the industry: practically absent;
competitive methods: only non-price competition.

Monopolistic competition

Monopolistic competition market (English "monopolistic competition") - characterized by a large number of sellers offering a diverse (differentiated) product.

In conditions of monopolistic competition, entry to the market is fairly free, there are barriers, but they are relatively easy to overcome. For example, in order to enter the market, a firm may need to obtain a special license, patent, etc. The control of firms-sellers over firms is limited. The demand for goods is highly elastic.

An example of monopolistic competition is the cosmetics market. For example, if consumers prefer Avon cosmetics, they are willing to pay more for it than for similar cosmetics from other companies. But if the price difference is too big, consumers will still switch to cheaper counterparts, such as Oriflame.

Monopolistic competition includes the food and light industry markets, the market for medicines, clothing, footwear, and perfumery. Products in such markets are differentiated - the same product (for example, a multi-cooker) from different sellers (manufacturers) can have many differences. Differences can manifest themselves not only in quality (reliability, design, number of functions, etc.), but also in service: the availability of warranty repairs, free shipping, technical support, payment by installments.

Features or features of monopolistic competition:

number of sellers in the industry: large;
size of firms: small or medium;
number of buyers: large;
product: differentiated;
price control: limited;
access to market information: free;
barriers to entry into the industry: low;
competitive methods: mainly non-price competition, and limited price.

Oligopoly

oligopoly market (English "oligopoly") - characterized by the presence on the market of a small number of large sellers, whose goods can be both homogeneous and differentiated.

Entry into the oligopolistic market is difficult, entry barriers are very high. The control of individual companies over prices is limited. Examples of an oligopoly are the automotive market, the markets for cellular communications, household appliances, and metals.

The peculiarity of an oligopoly is that the decisions of companies about the prices of a product and the volume of its supply are interdependent. The situation on the market strongly depends on how companies react when the price of products is changed by one of the market participants. Possible two kinds of reactions: 1) follow reaction- other oligopolists agree with the new price and set prices for their goods at the same level (follow the initiator of the price change); 2) reaction of ignoring- other oligopolists ignore price changes by the initiating firm and maintain the same price level for their products. Thus, an oligopoly market is characterized by a broken demand curve.

Features or oligopoly conditions:

number of sellers in the industry: small;
size of firms: large;
number of buyers: large;
goods: homogeneous or differentiated;
price control: significant;
access to market information: difficult;
barriers to entry into the industry: high;
competitive methods: non-price competition, very limited price competition.

Pure (absolute) monopoly

Pure monopoly market (English "monopoly") - characterized by the presence on the market of a single seller of a unique (having no close substitutes) product.

Absolute or pure monopoly is the exact opposite of perfect competition. A monopoly is a one-seller market. There is no competition. The monopolist has full market power: it sets and controls prices, decides how much goods to offer to the market. In a monopoly, the industry is essentially represented by just one firm. Barriers to market entry (both artificial and natural) are virtually insurmountable.

The legislation of many countries (including Russia) fights against monopolistic activity and unfair competition (collusion between firms in setting prices).

Pure monopoly, especially on a national scale, is a very, very rare phenomenon. Examples are small settlements (villages, towns, small towns), where there is only one shop, one owner of public transport, one railway, one airport. Or a natural monopoly.

Special varieties or types of monopoly:

natural monopoly- a product in an industry can be produced by one firm at a lower cost than if many firms were involved in its production (example: public utilities);
monopsony- there is only one buyer in the market (monopoly on the demand side);
bilateral monopoly- one seller, one buyer;
duopoly– there are two independent sellers in the industry (such a market model was first proposed by A.O. Kurno).

Features or monopoly conditions:

number of sellers in the industry: one (or two, if we are talking about a duopoly);
company size: various (usually large);
number of buyers: different (there can be both a multitude and a single buyer in the case of a bilateral monopoly);
product: unique (has no substitutes);
price control: full;
access to market information: blocked;
barriers to entry into the industry: virtually insurmountable;
competitive methods: absent as unnecessary (the only thing is that the company can work on quality to maintain the image).

Galyautdinov R.R.

The perfect competition market model is based on four basic conditions (Fig. 1.1). Let's consider them sequentially.

Rice. 1.1. Conditions for perfect competition

1.product homogeneity. This means that the products of firms in the view of buyers are homogeneous and indistinguishable, i.e. these products of different enterprises are completely interchangeable (they are complete substitute goods). More strictly, the concept of product homogeneity can be expressed in terms of the cross-price elasticity of demand for these goods. For any pair of manufacturing enterprises, it should be close to infinity. The economic meaning of this provision is as follows: goods are so similar to each other that even a small price increase by one manufacturer leads to a complete switch in demand for the products of other enterprises.

Under these conditions, no buyer will be willing to pay any particular firm more than he would pay its competitive firms. After all, the goods are the same, customers do not care which company they buy from, and they, of course, opt for cheaper ones. The condition of product homogeneity means, in fact, that the difference in prices is the only reason why a buyer can choose one seller over another.

2. Under perfect competition, neither sellers nor buyers affect the market situation due to the small size of the firm, the multiplicity of market participants. Sometimes both of these features of perfect competition are combined, speaking of the atomistic structure of the market. This means that there are a large number of small sellers and buyers operating in the market, just as any drop of water is made up of a gigantic number of tiny atoms.

At the same time, purchases made by the consumer (or sales by the seller) are so small compared to the total volume of the market, but the decision to lower or increase their volumes does not create either surpluses or shortages of goods. The aggregate size of supply and demand simply "does not notice" such small changes.

All these limitations (homogeneity of products, large number and small size of enterprises) actually predetermine that, under perfect competition, market entities are not able to influence prices. Therefore, it is often said that under perfect competition, each individual firm-seller "takes the price", or is a price-taker.

3. An important condition for perfect competition is no barriers to entering and exiting the market. When there are such barriers, sellers (or buyers) begin to behave like a single corporation, even if there are many of them and they are all small firms.

On the contrary, the absence of barriers typical of perfect competition or the freedom to enter and leave the market (industry) means that resources are completely mobile and move without problems from one activity to another. There are no difficulties with the termination of operations in the market. Conditions do not force anyone to stay in the industry if it does not suit their interests. In other words, the absence of barriers means the absolute flexibility and adaptability of a perfectly competitive market.

4. Information about prices, technology and likely profits is freely available to everyone. Firms have the ability to quickly and rationally respond to changing market conditions by moving the resources used. There are no trade secrets, unpredictable developments, unexpected actions of competitors. Decisions are made by the firm in conditions of complete certainty in relation to the market situation or, what is the same, in the presence of perfect information about the market.

In reality, perfect competition is quite rare and only a few of the markets come close to it (for example, the market for grain, securities, foreign currencies). For us, not only the area of practical application of our knowledge (in these markets) is of significant importance, but also the fact that perfect competition is the simplest situation and provides an initial, reference model for comparing and evaluating the effectiveness of real economic processes.

What should the demand curve for the product of a perfectly competitive firm look like? Let us take into account, firstly, that the firm takes the market price, which serves as a given value for the corresponding calculations. Secondly, the firm enters the market with a very small part of the total amount of goods produced and sold by the industry. Consequently, the volume of its production will not affect the market situation in any way, and this given price level will not change with an increase or decrease in the output of this firm.

Obviously, under such conditions, the demand for the company's products will graphically look like a horizontal line (Fig. 1.2). Whether the firm produces 10 units of output, 20 or 1, the market will absorb them at the same price R.

From an economic point of view, the price line, parallel to the x-axis, means the absolute elasticity of demand. In the case of an infinitesimal price reduction, the firm could expand its sales indefinitely. With an infinitesimal increase in the price, the sale of the enterprise would be reduced to zero.

Rice. 1.2. Demand and total income curves for an individual firm under the conditions

perfect competition

The presence of perfectly elastic demand for the firm's product is considered to be a criterion for perfect competition. As soon as this situation develops in the market, the firm begins to behave like (or almost like) a perfect competitor. Indeed, the fulfillment of the criterion of perfect competition sets many conditions for the company to operate in the market, in particular, determines the patterns of income.

A competitive firm can occupy a variety of positions in an industry. It depends on what its costs are in relation to the market price of the good that the firm produces. In economic theory, three most common cases of the ratio of the average costs of a firm are considered AC and market price R, determining the state of the firm (obtaining excess profits, normal profits or the presence of losses), which is shown in Fig. 1.3.

In the first case (Fig. 1.3, a) we observe an unsuccessful, inefficient firm: its costs are too high compared to the price of the goods on the market, and they do not pay off. Such a firm should either modernize production and reduce costs, or leave the industry.

In case 1.3, b, the firm with the volume of production Q E reaches equality between average cost and price (AC = P), which characterizes the equilibrium of the firm in the industry. After all, the average cost function of the firm can be considered as a function of supply, and demand is a function of price. R. This is how equality between supply and demand is achieved, i.e. equilibrium. Volume of production Q E in this case is balanced. While in equilibrium, the firm earns only accounting profit, and economic profit (i.e. excess profit) is equal to zero. The presence of accounting profit provides the firm with a favorable position in the industry.

The absence of economic profit creates an incentive to seek competitive advantages, for example, the introduction of innovations, more advanced technologies, which can further reduce the company's costs per unit of output and temporarily provide excess profits.

The position of the firm receiving excess profits in the industry is shown in fig. 1.3, c. With a production volume between Q1 before Q2 the firm has an excess profit: income received from the sale of products at a price R, exceeds the firm's costs (AC< Р). It should be noted that the maximum amount of profit is achieved in the production of products in the volume Q2 The size of profit is shown on fig. 1.3, in the shaded area.

However, it is possible to determine more precisely the moment when the increase in production should be stopped so that profits do not turn into losses, as, for example, with output at the level Q3. To do this, it is necessary to compare the marginal costs of the firm MS with the market price, which for a competitive firm is also the marginal revenue MR. Recall that the income (revenue) of the firm is called payments received in its favor when selling products. Like many other indicators, economics calculates income in three varieties. Total Revenue (TR) name the total amount of revenue that the company receives. Average income (AR) reflects revenue per unit of product sold, or, equivalently, total revenue divided by the number of products sold. Finally, marginal revenue (MR) represents the additional income generated from the sale of the last unit sold.

A direct consequence of the fulfillment of the criterion of perfect competition is that the average income for any volume of output is equal to the same value, namely, the price of the goods. The marginal revenue is always at the same level. So, if the price of a loaf of bread established in the market is 23 rubles, then the bread stall acting as a perfect competitor accepts it regardless of the volume of sales (the criterion of perfect competition is fulfilled). Both 100 and 1000 loaves will be sold at the same price per piece. Under these conditions, each additional loaf sold will bring the stall 23 rubles. (marginal income). And the same amount of revenue will be on average for each loaf sold (average income). Thus, equality is established between average income, marginal income and price (AR=MR=P). Therefore, the demand curve for the products of an individual enterprise in conditions of perfect competition is simultaneously the curve of its average and marginal prices.

As for the total income (total revenue) of the enterprise, it changes in proportion to the change in output and in the same direction. That is, there is a direct, linear relationship:

If the stall in our example sold 100 loaves of 23 rubles, then its revenue, of course, will be 2300 rubles.

Rice. 1.3. The position of a competitive firm in the industry:

a - the company suffers losses;

b - obtaining a normal profit;

c - making super profits

Graphically, the curve of total (gross) income is a ray drawn through the origin with a slope:

tg=∆TR/∆Q=MR=P

That is, the slope of the gross income curve is equal to marginal revenue, which in turn is equal to the market price of the product sold by the competitive firm. From this, in particular, it follows that the higher the price, the steeper the straight line of gross income will go up.

Marginal cost reflects individual production cost each subsequent unit of goods and change faster than average costs. Therefore, the firm achieves equality MS = MR, at which profit is maximized, much earlier than average cost equals the price of the good. At the condition that marginal cost is equal to marginal revenue (MC = MR) is production optimization rule. Compliance with this rule helps the company not only maximize profit, but also minimize losses.

So, a rationally operating firm, regardless of its position in the industry (whether it suffers losses, whether it receives normal profits or excess profits), must produce only optimal production volume. This means that the entrepreneur must strive for such a volume of output at which the cost of producing the last unit of goods MS will be the same as the proceeds from the sale of that last unit MR. In other words, the optimal output is reached when the marginal cost equals the firm's marginal revenue: MS = MR. Consider this situation in Fig. 1.4, a.

Rice. 1.4. Analysis of the position of a competitive firm in the industry:

a - finding the optimal volume of output;

b - determining the profit (or loss) of a firm - a perfect competitor

In figure 1.4, but we see that for a given firm, the equality MS=MR achieved by the production and sale of the 10th unit of output. Therefore, 10 units of goods is the optimal volume of production, since this volume of output allows you to maximize profits, i.e. get all the profits in full. By producing fewer products, say five units, the firm's profit would be incomplete and we would only get a portion of the shaded figure representing profit.

It is necessary to distinguish between the profit received from the production and sale of one unit of output (for example, the fourth or fifth), and the total, total profit. When we talk about profit maximization, we are talking about getting the entire profit, i.e. total profit. Therefore, despite the fact that the maximum positive difference between MR and MS gives the production of only the fifth unit of output (see Fig. 1.4, a), we will not stop at this quantity and will continue to release. We are fully interested in all products, in the production of which MS< МR, which brings profit before MS alignment and MR. After all, the market price pays for the production costs of the seventh, and even the ninth unit of output, additionally bringing, albeit small, but still profit. So why give it up? It is necessary to refuse from losses, which in our example arise in the production of the 11th unit of output. Now the balance between marginal revenue and marginal cost is reversed: MS > MR. That is why, in order to get all the profit in full (to maximize profit), it is necessary to stop at the 10th unit of production, at which MS=MR. In this case, the possibilities for further increase in profits have been exhausted, as evidenced by this equality.

The rule of equality of marginal cost to marginal revenue considered by us underlies the principle of production optimization, which is used to determine optimal, the most profitable volume of production at any price emerging on the market.

Now we have to find out what the firm's position in the industry at optimal output: whether the firm will incur losses or make a profit. For this, let us turn to Fig. 1.4, b, where the company is shown in full: to the function MS added a graph of the average cost function AS.

Let's pay attention to what indicators are plotted on the coordinate axes. Not only the market price is plotted on the y-axis (vertically) R, equal to the marginal revenue under perfect competition, but also all types of costs (AC and MS) in terms of money. The abscissa (horizontally) always plots only the volume of output Q. To determine the amount of profit (or loss), we must perform several actions.

Step one: using the optimization rule, we determine the optimal output volume Qopt, in the production of the last unit of which equality is achieved MS = MR. On the graph, this is marked by the intersection point of functions MS and MR. From this point, we lower the perpendicular (dashed line) down to the x-axis, where we find the desired optimal output volume. For the firm in Figure 1.4, b, the equality between MS and MR achieved by the production of the 10th unit of output. Therefore, the optimal output is 10 units.

Recall that under perfect competition, a firm's marginal revenue is the same as its market price. There are many small firms in the industry and none of them individually can influence the market price, being a price taker. Therefore, for any volume of output, the firm sells each subsequent unit of output at the same price. Accordingly, the price functions R and marginal income MR match (MR = P), which saves us from looking for the optimal output price: it will always be equal to the marginal revenue from the last unit of goods.

Step two: determine the average cost AC in the production of goods in the volume Q opt . To do this, from the point Q opt , equal to 10 units, we draw a perpendicular up to the intersection with the function AU, putting a point on this curve. From the obtained point, we draw a perpendicular to the left to the y-axis, on which the amount of costs in monetary terms is plotted. Now we know what the average cost is AC optimum production volume.

Step three: determine the profit (or loss) of the firm. We have already found out what the average costs are AC for Q opt . Now it remains to compare them with the market price R, prevailing in the industry.

Remaining on the y-axis, we see that the level marked on it AC< Р. Therefore, the firm makes a profit. To determine the size of the total profit, multiply the difference between the price and the average cost (R-AS), component of profit from one unit of production, for the entire volume of the entire output Q opt:

Firm profit = (R - AC)*Qopt

Of course, we are talking about profit, provided that P > AC. If it turned out that R< АС, then we would talk about the losses of the company, the size of which is calculated according to the same formula.

In figure 1.4, b, the profit is shown as a shaded rectangle. Note that in this case, the company received not accounting, but economic or excess profits that exceed the costs of lost opportunities.

There is also another way to determine profit(or loss) of the firm. Recall what can be calculated if we know the sales volume of Qopt and the market price R? Of course, the magnitude total income:

TR = P* Qopt

Knowing the magnitude AC and output, we can calculate the value total costs:

TS = AC*Qopt

Now it is very easy to determine the value using simple subtraction profit or loss firms:

Profit (or loss) of the firm = TR - TC.

When (TR - TS) > 0 the firm is making a profit, but if (TR - TS)< 0 the firm incurs losses.

So, at the optimal output, when MS = MR, A competitive firm can make economic profits (surplus profits) or suffer losses. Why is it necessary to determine the optimal volume of output in case of losses? The fact is that if the firm produces according to the rule MS = MR, then at any (favorable or unfavorable) price that develops in the industry, it still wins.

Benefit from optimization is that if the equilibrium price in an industry is above the average cost of a perfect competitor, then the firm maximizes profit. If the equilibrium price in the market falls below average cost, then MS = MR firm minimizes losses otherwise they could be much larger.

What happens in the industry with the company in the long run? If the equilibrium price prevailing in the industry market is higher than the average cost, then firms receive excess profits, which stimulates the emergence of new firms in a profitable industry. The influx of new firms expands the industry offer. We remember that an increase in the supply of goods on the market leads to a decrease in price. Falling prices “eat up” the excess profits of firms.

Continuing to decline, the market price gradually falls below the average costs of firms in the industry. Losses appear, which “expels” unprofitable firms from the industry. Note: those firms that are not able to implement cost-cutting measures leave the industry, those. inefficient companies. Thus, the excess supply in the industry is reduced, while the price in the market begins to rise again, and the profits of companies that are able to restructure production grow.

So in the long run industry supply is changing. This happens due to an increase or decrease in the number of market participants. Prices move up and down, each time passing through a level at which they are equal to the average cost: R = AC. In this situation, firms do not incur losses, but do not receive excess profits. Such long term situation called equilibrium.

Under conditions of equilibrium, when the demand price coincides with the average cost, the firm produces products according to the optimization rule at the level MR = MS, those. produces the optimal amount of goods. In the long run, equilibrium is characterized by the fact that all the parameters of the firm coincide: AC = P = MR = MS. Since a perfect competitor always P=MR, then equilibrium condition for a competitive firm in the industry is equality AC = P = MS.

The position of a perfect competitor upon reaching equilibrium in the industry is shown in Fig. 1.5.

Rice. 1.5. The equilibrium of a firm that is a perfect competitor

In Figure 1.5, the price function (market demand) for the firm's products passes through the intersection point of the functions AC and MS. Since, under perfect competition, the firm's marginal revenue function MR coincides with the demand (or price) function, then the optimal production volume Q opt corresponds to the equality AC \u003d P \u003d MR \u003d MS, which characterizes the position of the firm in the conditions equilibrium(at point E). We see that in the conditions of long-run equilibrium, the firm does not receive any economic profit or loss.

However, what happens to the firm itself in the long run? Long term LR(from English Long-run period) fixed costs of the firm FС increase with the expansion of its production potential. In this case, changing the scale of the firm using appropriate technologies produces economies of scale. The essence of this scale effect that in the long run the average cost LRAC, having decreased after the introduction of resource-saving technologies, they cease to change and, as output grows, remain at a minimum level. Once economies of scale have been exhausted, average costs begin to rise again.

The behavior of average costs in the long run is shown in Fig. 1.6, where economies of scale are observed with an increase in production from Qa to Qb. Over the long run, the firm changes its scale in search of the best output and lowest costs. In accordance with the change in the size of the firm (volume of production capacity), its short-term costs change AS. Various options for the scale of the firm, shown in Fig. 1.6 in the form of short-term AU, give an idea of how the firm's output may change in the long run LR. The sum of their minimum values is the long-term average costs of the company - LRAC.

Rice. 1.6. Average cost of the firm in the long run - LRAC

What is the best size for a firm? Obviously, one at which the short-run average cost reaches the minimum level of the long-run average cost LRAC. After all, as a result of long-term changes in the industry, the market price is set at the level of the LRAC minimum. This is how the firm achieves long-run equilibrium. In conditions balance in the long run the minimum levels of short-term and long-term average costs of the firm are equal not only to each other, but also to the price prevailing in the market. The position of the firm in a state of long-term equilibrium is shown in Fig. 1.7.

The main features of the market structure of perfect competition in the most general form have been described above. Let's take a closer look at these characteristics.

1. The presence on the market of a significant number of sellers and buyers of this good. This means that no seller or buyer in such a market is able to influence the market equilibrium, which indicates that none of them has market power. The subjects of the market here are completely subordinated to the market element.

2. Trade is carried out in a standardized product (for example, wheat, corn). This means that the product sold in the industry by different firms is so homogeneous that consumers have no reason to prefer the products of one firm to those of another manufacturer.

3. The inability for one firm to influence the market price, since there are many firms in the industry, and they produce a standardized product. In conditions of perfect competition, each individual seller is forced to accept the price dictated by the market.

4. Lack of non-price competition, which is associated with the homogeneous nature of the products sold.

5. Buyers are well informed about prices; if one of the producers raises the price of their products, they will lose buyers.

6. Sellers are not able to collude on prices, due to the large number of firms in this market.

7. Free entry and exit from the industry, i.e., there are no entry barriers blocking entry into this market. In a perfectly competitive market, there is no difficulty in starting a new firm, and there is no problem if an individual firm decides to leave the industry (since firms are small, there is always an opportunity to sell a business).

Markets for certain types of agricultural products can be named as an example of perfect competition markets.

Note. In practice, no existing market is likely to meet all the criteria for perfect competition listed here. Even markets very similar to Perfect Competition can only partially meet these requirements. In other words, perfect competition refers to ideal market structures that are extremely rare in reality. Nevertheless, it makes sense to study the theoretical concept of perfect competition for the following reasons. This concept allows us to judge the principles of functioning of small firms that exist in conditions close to perfect competition. This concept, based on generalizations and simplification of analysis, allows us to understand the logic of the behavior of firms.

Examples of perfect competition (of course, with some reservations) can be found in Russian practice. Small market traders, tailor shops, photographic shops, car repair shops, construction crews, apartment remodelers, peasants at food markets, retail stalls can be regarded as the smallest firms. All of them are united by the approximate similarity of the products offered, the insignificant scale of the business in terms of market size, the large number of competitors, the need to accept the prevailing price, that is, many conditions for perfect competition. In the sphere of small business in Russia, a situation very close to perfect competition is reproduced quite often.

The main feature of the perfect competition market is the lack of price control by an individual producer, i.e., each firm is forced to focus on the price set as a result of the interaction of market demand and market supply. This means that the output of each firm is so small compared to the output of the entire industry that changes in the quantity sold by an individual firm do not affect the price of the good. In other words, a competitive firm will sell its product at a price already existing in the market. As a consequence of this situation, the demand curve for the product of an individual firm will be a line parallel to the x-axis (perfectly elastic demand). Graphically, this is shown in the figure.

Since an individual producer is unable to influence the market price, he is forced to sell his products at the price set by the market, i.e., at P 0 .

A perfectly elastic demand for a competitive seller's product does not mean that a firm can increase output indefinitely at the same price. The price will be constant insofar as the usual changes in the output of an individual firm are negligible compared with the output of the entire industry.

For further analysis, it is necessary to find out what will be the dynamics of the gross and marginal income (TR and MR) of a competitive firm depending on the volume of production (Q), if the firm sells any volume of manufactured products at a single price, i.e. P x = const . In this case, the TR (TR = PQ) graph will be represented by a straight line, the slope of which depends on the price of the products sold (P X): the higher the price, the steeper the graph will have. In addition, a competitive firm will face a graph of marginal revenue that is parallel to the x-axis and coincides with the demand curve for its products, since for any value of Q x, the value of marginal revenue (MR) will be equal to the price of the product (P x). In other words, a competitive firm has MR = P x. This identity takes place only under conditions of perfect competition.

The marginal revenue curve of a perfectly competitive firm is parallel to the x-axis and coincides with the demand curve for its product.

In the 19th century, a small funeral home operated and flourished in Kansas City. But on one not too happy day, its owner Almon Strowger calculated his income for the last months and found that the turnover was falling, but his main competitor, on the contrary, increased sales.

A small investigation showed that the fact is that the most prosperous clients have already begun to use telephones, and in the event of the death of a relative, they called the telephone exchange, where the wife of Strowger's main competitor worked. When she was asked to be connected to a ritual agency, of course, she redirected everyone to her own spouse.

This is a story about unfair competition. And it could have ended differently. Having calculated the losses, the entrepreneur could well close his own agency or kill the telephone operator in a fit of rage. But Almon Strowger acted differently: when complaints to the station's authorities failed, he focused on creating a mechanism that would replace manual labor. So in 1892 the first automatic telephone exchange was invented and patented, which the creator himself called "a telephone without young ladies and curses."

Such is it, many-sided competition! It can serve as an engine of progress, or, on the contrary, it can become the cause of cruel crimes. And in order to form your own opinion, whether competition is useful to society or dangerous to it, you will have to understand in detail the nature of this phenomenon. Shall we start?

Competition -what is it in simple words

For the first time the word "competition", borrowed from the German "konkurrieren", was recorded in the Russian dictionary in 1878. The term originates from two Latin words:

con - together;
currere - to run.

Thus, competition is the rivalry of several subjects in order to achieve one goal. Moreover, the successes of one always mean losses for the other. Biologists consider competition to be the driving force of evolution: it is thanks to it that the most adapted representatives of flora and fauna are preserved on the planet, and the weakest gradually die out.

Economists characterize competition as a struggle between companies. Each of them defends its own interests: it tries by any means to attract the attention of buyers, sell as many goods and services as possible and, as a result, get the maximum profit.

Interestingly, the word "competition" has the same roots as "competition". But in this case, we are not talking about a constant struggle for the buyer, but about the desire to achieve victory in the competition.

Competition as an economic law

For the first time, mankind encountered the phenomenon of economic competition in ancient times, under conditions of simple commodity production. Already in primitive society, each artisan sought to extract the maximum benefit for himself to the detriment of other participants in the market exchange.

With the emergence of the slave system, competition only intensified. The farms became larger, the labor of forced and hired workers made it possible to produce more and more, strengthening their position in society.

But only in the 18th century did Adam Smith, a Scottish economist and philosopher, become interested in competition as a phenomenon. He drew attention to the fact that there is a stable connection between rival companies. And he suggested that competition is not an accident, but an objectively acting force that actively influences not only sellers and buyers, but also the development of the industry as a whole.

At the same time, 3 conditions necessary for the emergence of competition were formulated:

Complete economic independence of each manufacturer, in which each company acts solely to achieve its goals.
The dependence of each seller on the current situation in the market: the volume of supply and demand, the amount of wages, the exchange rate. So, if the average salary of a sales assistant in Moscow is 40,000 rubles, the company can hardly count on finding, and most importantly, retaining an experienced, conscientious employee by offering him 25,000 rubles a month.
Lack of agreements with other manufacturers, that is, the struggle of all against all.

In such a situation, the only way for the manufacturer to win is to fight to improve the quality of the goods, reduce their own costs, and, following them, prices. This is how the law of competition works - an objective process of removing expensive low-quality products from the market. The essence of the law is revealed more fully through the functions that competition performs in the economy.

Functions of competition in the economy

In a market economy, competition has 6 main functions:

1 Regulatory. In conditions of free competition, firms produce exactly as much product as the consumer needs. Equilibrium is not established immediately, the company comes to it after several months of work, analyzing the volume of demand and sales.

For example: the manufacturer of school desks made of natural wood "KIND" during the summer season sells 1500 - 1700 budget models "Novichok". If by June the company does not fulfill the production plan to meet demand, it will have to introduce additional shifts, urgently expand the staff, but still not every buyer agrees to wait for his purchase instead of the standard 3 days 2-3 weeks. Part of the profit will be lost. The reverse situation is also losing: excess production entails the need to expand storage facilities, and with them the overall costs of the enterprise.

Thus, competition in the market determines the amount of demand for the products of each firm, and establishes the optimal volume of production.

2 Allocation. Its name comes from the English "allocation" - "accommodation". And it means that in a competitive environment, it is easier to achieve success for enterprises that are located closest to production resources.

It is not for nothing that all hydroelectric power stations are located near large water sources, and the energy they produce supplies the nearby regions. It also makes no sense to install wind farms in the Moscow region, which belongs to the areas of the 1st, most windless, category. But the Krasnodar Territory, according to the wind map of Russia, has been assigned a coefficient of 6. And here the installation of wind power plants will be fully justified.

3 Innovative. The rapid development of technology in the modern world is the result of competition. The easiest way to trace this process is through the evolution of mobile phones. Only 36 years have passed since the release of the first model intended for free sale - Dyna TAC 8000X. On the scale of science, this is quite a bit. But today a smartphone is already a full-fledged replacement for a camera and a game console, a player and a computer. And engineers are not going to stop: leading manufacturers present new products every six months.

4 Adaptive. This function lies in the ability of enterprises to adapt to the external environment, offering customers exactly what they expect. So, most grocery stores have either switched to a 24-hour work schedule, or close closer to midnight. This allows customers to buy products after work in a calm mode, and entrepreneurs to increase profits.

5 Distribution. The market is a living organism that is constantly changing. Every day, entrepreneurs assess the situation and decide for themselves whether it makes sense to further invest their own resources in existing projects or whether it is time to explore new horizons. So from low-income industries, where there are already a sufficient number of manufacturers or the demand for products is steadily falling, there is a constant outflow to more promising areas.

6 Controlling. In conditions of fair competition, no manufacturer or seller can take a dominant position in the market and become a monopolist.

Working together, all the functions of competition turn the industry into an efficient, self-regulating system. And the combination of competitive industries creates a more or less successful market economy. That is why competition is often called the engine of the market economy.

Advantages and disadvantages of competition in the market

For society as a whole, competition is a positive phenomenon. She is:

stimulates the development of scientific and technological progress, thereby improving the quality of life of the population;
makes manufacturers respond quickly to consumer requests: expand the range, improve the quality of goods, look for ways to reduce costs;
forms fair market prices as opposed to the predatory pricing policy of monopolists;
prevents the development of shortages of goods and services.

And the main sign of the presence of free competition in most sectors of the state and an effective market economy as a whole is the increase in the middle class among the population.

There are also negative points in the competitive environment:

a huge temptation for many manufacturers to use "dirty" methods of dealing with competitors;
instability of the situation in the market of goods and services: out of 100 entrepreneurs, 95 burn out in the first couple of years of their activity;
a large number of ruined commodity producers provokes an increase in unemployment;
incomes are distributed unevenly among different social groups of the population.

Conditions for maintaining competition

Free competition is a very unstable market model. Entrepreneurs left to their own devices first take weak players out of the game. They leave due to lack of resources:

And then viable companies begin to negotiate among themselves: about holding prices and even merging. It is more profitable for firms economically than constantly developing technologies and looking for ways to reduce costs. But the buyer ends up with inflated prices and an artificially created shortage.

2 economy class hairdressing salons have opened in the residential area. But the first was opened by a student without initial capital, and the second was opened by an experienced businessman with sufficient capital, who knows well that a new business in the first months requires constant injections. At the same prices, the chances of surviving at a hairdressing salon owned by a student are minimal.

But a businessman can attract visitors with a bright opening, great comfort, for example, by immediately installing a TV. Later, he will send craftsmen to advanced training courses and offer new services, and maybe even poach the best workers from his competitor. In an effort to become a monopolist, for a limited period of time he can work even at a loss, which a student cannot afford. But after the competing barbershop goes bankrupt, you can already dictate your prices.

Thus, competition naturally always, sooner or later, leads to the emergence of a monopoly enterprise. And the only way to keep the rivalry between entrepreneurs is government intervention.

Only external deterrents can protect firms from each other and prevent manifestations of unfair competition. Therefore, all the developed powers of the world have adopted antitrust laws. And they actively use 2 main methods of protecting competition:

a ban on the creation of monopolies;
strict regulation of prices for products of natural monopolies, for example, fixed fares for public transport tickets.

State regulation of competition

For Russia, the issue of supporting competition is of particular importance. For many decades, our country has been actively using the advantages of large-scale production, its specialization and concentration. In fact, the entire industry was in the hands of monopoly enterprises.

And with the transition to a market economy, it was necessary to create a new legal framework that could support the emerging small and medium-sized businesses. The first such document was the Law of the RSFSR "On Competition and Restriction of Monopolistic Activities in Commodity Markets", adopted on March 22, 1991. In connection with the active development of the banking services market, on June 4, 1999, another legal act was approved - the Federal Law “On Protection of Competition in the Financial Services Market”.

In 2006, both regulations were replaced by the Federal Law “On Protection of Competition”. Moreover, the conduct of antimonopoly policy is also spelled out in the Constitution of the Russian Federation. Article 34 unequivocally states: "Economic activities aimed at monopolization and unfair competition are not allowed."

Control over the implementation of the provisions of the Law is carried out:

Ministry of the Russian Federation for Antimonopoly Policy and Entrepreneurship Support;
its territorial divisions.

In order for the activity of an enterprise to be recognized as threatening free competition, the share of its products on the market for goods and services must be 65%. But there are exceptions: the antimonopoly committee can impose sanctions already with a share of 35%, if the company prevents new firms from entering the industry and dictates its conditions to competitors.

Participants of competitive relations

Participants of legal relations are called subjects by the legislation. In competition law, the main ones are:

sellers or business entities, that is, individual entrepreneurs and enterprises of all forms of ownership that carry out income-generating activities;
buyers of goods or services. For them, the Law does not prescribe duties, but acts precisely in their interests. In case of suspicion of violations of the antimonopoly law, buyers have the right to file a complaint with the territorial division of the antimonopoly committee.

The joint actions of buyers and sellers form supply and demand in the markets for goods and services. Under conditions of free competition, they balance naturally and set economically fair prices.

Other subjects can also influence competitive relations:

These entities do not participate in competition, but are in the field of antimonopoly legislation, as they are able to provide individual companies with significant advantages: issue a license, finance, establish tax incentives. All this negatively affects other participants in the competitive struggle.

Interestingly, the circle of subjects of competition law includes not only already operating enterprises and real buyers, but also potential sellers and potential consumers:

a potential seller is one who is ready to start producing and/or selling a product within 1 year that is already on the market at a price not exceeding the average market price by more than 10%. At the same time, production costs will pay off within 12 months;
a potential buyer is one who is ready to purchase a product, but for some reason has not yet done so.

Since, in an effort to oust competitors, firms often combine their efforts, the Law defines another subject of competition law - a group of persons. They can be united by relations of any kind: labor or contractual, property or family.

Despite the fact that their actions are coordinated and aimed at achieving the same goal, in the framework of legal proceedings, the degree of participation of each person in a crime is considered individually.

Forms of competition

To stay within the bounds of the law, today it is not enough not to cross the 65% barrier of control over the industry. On October 5, 2015, Chapter 2.1 was introduced into the Federal Law “On Protection of Competition”. Unfair competition. And now the Antimonopoly Committee has the right to consider not only the degree of influence of the company, but also the methods of its struggle. Therefore, it is very important to understand the line where conscientious, socially approved, competition ceases to be such.

Fair competition - fair and legal methods of competition that do not conflict with generally accepted business practices:

Unfair competition - any actions of economic entities that are contrary to the law and business ethics, and may harm the business reputation of competitors, cause financial damage to them.

Methods of unfair competition:

Types of competitive markets

Depending on the severity of competition between firms, there are 4 main types of the market for goods and services:

Perfect Competition, in which a huge number of firms operate in the industry, and there are no barriers for newcomers. A product in a perfectly competitive market is standardized. For example, there are hundreds of farms in each region that provide stores with eggs, milk, vegetables and fruits. Farmers cannot influence the price of their products in any way, and any landowner is able to enter the market without much effort.
Monopolistic competition- a market in which there are also a large number of sellers, and there are no barriers to entry into the industry. But the product in such a market has its own zest. For example, one publishing house publishes exclusively detective stories, another - women's novels, the third - non-fiction literature. The competition here is non-price, and advertising and brand awareness help to increase.
Oligopoly- a market represented by a small number of sellers, largely due to the fact that entry into the industry is difficult. For example, to produce household appliances, one desire is not enough. Significant financial investments, engineering developments, highly qualified personnel, permits from regulatory authorities, and a well-thought-out marketing strategy will be required. Of course, few entrepreneurs are able to realize all this. Those who succeed become the few big players who can already influence pricing.
Absolute monopoly. The market is represented by one single seller, and entry into the industry is blocked. The monopolist himself determines the volume of output and has unlimited power over prices. Example: OAO Gazprom, OAO Russian Railways.

Thus, the weaker the competition in the market for goods or services, the more power the producer has. And vice versa, when there are many sellers, the buyer has the opportunity to choose the product that suits him as much as possible in terms of price and quality.

Video: Competition and its types

Types of competition in the economy

Economists combine all 4 market models into 2 large groups, highlighting:

perfect competition;
imperfect competition.

Perfect or pure competition- an ideal model, an abstraction that is very rare in real life. It is characterized by:

A very large number of vendors in the industry. They act independently of each other, each working in their own interests. So, there are a huge number of fishing enterprises in the world. And the largest of them account for approximately 0.0000107% of the world's catch. Even if one or several firms increase the catch several times, this will not affect the state of the industry in any way.
Standardized or homogeneous product. The product is similar or so similar that, by and large, it makes no difference to the buyer from which of the sellers to make a purchase. A striking example: currency exchangers.
The inability of the seller to influence the price of the goods. For example, if at the vegetable market 3 sellers at once set a price of 300 rubles for 500-gram baskets of strawberries, it makes no sense for the fourth one to demand 400 rubles. He simply will not sell the berries, and they will go bad. But lowering prices is also unprofitable if there is an opportunity to earn more. Thus, in a perfectly competitive market, the seller always takes the role of a price follower.
Free entry into and exit from the industry. New firms can enter a competitive market without serious financial opportunities or technological innovations. They are not hindered by legislative authorities, on the contrary, all information about doing business is freely available. Example: stall trade, the creation of construction and repair teams.

A situation in which one or more of the conditions for perfect competition is not met:

Although the product from different sellers belongs to the same group, it has its own characteristics. For example, one sells Golden apples, and the other sells Semerenko;
There are barriers to entry into the industry: for example, to open the most modest gym, you will need at least 1 million rubles. And this is not the amount that any potential entrepreneur can easily find;
There are already leaders in the industry. In this case, we are talking more about oligopolistic competition;
From the very beginning, the entrepreneur has the opportunity to influence the price of his products. For example, the same strawberry sellers in a small market may well agree on a single price. Or, using greenhouses, the farmer will achieve ripening of berries 2 weeks earlier, and will be able to sell his crop for much more.

Thus, imperfect competition is a market model that, to varying degrees, but allows sellers to influence the price of their products. And monopolistic competition, oligopoly, monopoly are just varieties of imperfect competition.

Types of competition by degree of freedom

The phrase "free competition" has long become stable. It implies that the activities of individual entrepreneurs are not influenced by either government agencies or larger and more influential market players.

In contrast to free competition, there is also regulated competition. It occurs when one or a few firms achieve a significant market share and are able to influence prices and prevent newcomers from entering the industry. The regulatory function in this case is performed by the state.

Types of competition by industry

Economics deals with market competition - the struggle of producers for each buyer. Demand in this market is limited by the solvency of consumers, and the struggle is carried out by all legal means: price and non-price.

Market competition is:

intra-industry:
intersectoral;
international.

Intra-industry competition- this is the rivalry between manufacturers or sellers working in the same industry. They produce or sell similar products that differ in price, model range, quality. Moreover, intra-industry competition can be:

subject;
specific.

Subject competition- one in which rival firms produce an identical product. It can only vary slightly in quality. Example: Russian manufacturers of bed linen of the middle price category - "SailD", "MONA LIZA", "AMORE MIO".

Species competition- a type of rivalry in which companies produce goods of the same type: shoes, clothes, furniture, but at the same time it differs in some serious parameters. For example, the RIMAL shoe factory produces affordable children's shoes for absolutely healthy children, and the MEGA Orthopedic company specializes in tailoring orthopedic models.

Intersectoral or functional competition is the struggle of representatives of different industries. For example, residents of Moscow can get to Sochi both by rail and by plane. The first is cheaper, the second saves time. But in general, both that and that transport help the traveler to achieve the goal.

Interethnic competition is the competitive struggle of two countries. Its goal can be not only the conquest of the largest possible market, but also prestige on the world stage. Example: confrontation between the US and the USSR in the field of space exploration.

Competition Methods

There are two ways to try to beat competitors: by lowering the price or by offering more attractive conditions, but at the same prices.

The first strategy is price competition. For example, a newly opened dry cleaner offers a 20 percent discount on their services. The business owner is well aware that in the future he will not be able to keep such a low price, but in the short term the strategy will provide a large influx of customers, and if they like the service, they are likely to call again and again.

Good service is non-price competition, which most buyers value more than a lower price and possible discounts. Our subconscious perceives price reduction more aggressively, forcing meticulously to look for a catch. Methods of non-price competition (catchy advertising, convenient delivery terms, beautiful packaging, other marketing tricks) seem to be more noble, although if you dig deeper, there is no difference.

For example, at the same prices for bottled water, the Aqua company will also offer free delivery. In terms of the price per liter of water for the buyer will be less. And non-price competition will be the most that neither is price.

Price competition is not always a short-term phenomenon. Thus, with the timely updating of equipment, improvement of the system and logistics, the manufacturer can really achieve a significant reduction in cost.

While maintaining the size of the trade margin and the achieved sales volume, the company's profit does not decrease, although for the end consumer the product will significantly fall in price. Competitors in such a situation have to either follow the more successful firm, or leave the market.

Competition outside economics

Competition as a competition for a good that is available in limited quantities is typical for politics and science, sports and military affairs, art and creativity. Perhaps there is not a single human activity in which it would be impossible for the emergence of a struggle for money, power, fame or respect.

Achieving the goal occurs with the help of competitive actions, a concept formulated by the American economist Michael Porter. It involves the commission of acts directly or indirectly addressed to competitors. Their goal is to strengthen their positions and at the same time weaken the opponent.

competition in biology

If in human society competition is rivalry, in the world of flora and fauna, the phenomenon is more likely to be synonymous with war. A war for a place to live, sources of food, a war for life itself.

There are two types of competition in biology:

Intraspecific competition. The most desperate and cruel, the struggle flares up between representatives of the same species. Birds fight to the death for the best nesting sites, walruses and seals win back a female for mating, and out of hundreds of young Christmas trees in a clearing, only 2-3 trees grow to adulthood. The rest die from lack of sunlight.
Interspecific competition flares up between individuals of different species. Moreover, the Russian biologist G.F. Gause proved that if 2 species with the same needs live in the same territory, the strongest will definitely crowd out the weakest. So, in Australia, the native bee, devoid of sting, has already been almost completely destroyed. And all because a few decades ago, a honey bee was introduced to the mainland.

Competition of norms in law

In legal practice, situations often occur when the same action is regulated by two different regulations. And the court will have to decide which of the two documents to apply. The competition of norms happens:

temporary, when the norms were in force at different periods of time;
spatial: for example, in different states of America, different punishments are provided for the same crime;
hierarchical: all normative documents have different legal force. The main legal act in our country is the Constitution of the Russian Federation, then there are Federal constitutional laws, after them Federal laws and so on.

But the most common competition of norms in law is substantive. The easiest way to explain it is with an example. Suppose a crime is committed with two aggravating circumstances. They are described by different articles of the Criminal Code. When determining punishment, the judge, as a rule, qualifies the crime according to the norm that provides for a more severe punishment. And, conversely, under two mitigating circumstances, the rule prescribing a more lenient punishment is applied.

Answers on questions

Competitive as spelled

The correct spelling is “competitive” (without the “n”). This word consists of two roots: "competition" - there is no "n" and "capable".

What is a competitor

A competitor is a person or group of persons, and it can also be a company or even a state, that competes with another person(s) for the right to own something or for any interests.

Conclusion

Competition is the driving force of evolution. It condemns the weak to extinction and allows the strongest to survive. It is thanks to her that more and more resistant strains of bacteria and viruses appear on the planet, which are not amenable to known antibiotics and antiviral drugs. Hundreds of animal species and thousands of plant species have become extinct in competition. But those that survived have managed to adapt to droughts and frosts, polluted air and the ubiquitous humanity.

In the economy, competition acts for the benefit of the consumer, forcing sellers to reduce prices and expand the range, manufacturers to improve the quality of goods and design new, even more advanced models.

Entrepreneurs fear competition and dislike it. Still would! It is impossible to relax even for one day, otherwise a more efficient comrade will grab a share of the profit. And yet, fair competition is the fairest struggle, which unmistakably defines the losers and those who have chosen the right strategy.

Roman Kozhin

The author of the blog "My Ruble", in the past the head of the credit department in the bank. In the present Internet entrepreneur, investor. I talk about how to effectively manage your money, how to increase it profitably, and earn more. Thanks to the Internet, he moved to the sea. You can follow my life in social networks using the links below.

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