Free Creative Writing On Competition

The objective of every firm is to sell its products or services at a profit to as many customers as it can attract. However, because there are many firms selling the same or similar products and services, each one of them tries to outdo each other using various strategies. The most common strategies include manipulating prices, being innovative, and offering excellent services. As companies compete, customers derive some benefits such as lower prices, higher quality of goods, excellent services, and efficient allocation of resources. Competition is responsible for creative destruction where firms that fail to become innovative are driven out of the market. The entry to a market is determined by the kind of competition that is prevailing in a given market. In an ideal case, entry is easy when there is no competition. Markets are defined by various types of competitions that include perfect competition and monopolistic competition. Markets which are easy to enter presents an opportunity for various firms in competition to offer similar products and services but lower probability of earning positive economic profit. The shape of a demand curve is determined by the nature of the competition in the market. There are instances where firms face various barriers as they try to enter markets. Some of the barriers include established brand name of the rival, sunk costs, unique resources, economies of scale, and size of the firm relative to the market. Market structures depend on the number of firms operating in a given market. A market can be described as oligopolistic if it is characterized by few firms but difficult entry. There are various types of oligopolies. In price-leadership oligopoly, the rival firms follow the leader’s set price. Unlike an oligopoly, all firms in a cartel control and limit production among themselves. However, the practice is illegal in the US. In a cartel, the firms collude to minimize competition by not only agreeing on a particular price but also by intentionally creating barriers to entry.