Competition is an integral part of market relations and relations between business entities. This is a struggle of manufacturers for materials, raw materials and the market for products. To win the competition means to conquer the consumer market and get the maximum profit from their activities. This fact of the economy is a mechanism that regulates the amount of production. Consider what is competition and its types.
The presence of competition forces manufacturers of goods and services to improve the quality, level of productivity, as well as reduce the cost of production. The consequence of this is a reduction in prices, as a way to fight for the consumer. Manufacturers are forced to expand the range and quality of their products. Competition and its types cover the entire market of goods and services. Ideally, the market should be attended by many manufacturers who have equal conditions for the production and sale of their products. The result is perfect competition, where better products with the lowest price win.
But in fact, this kind of competition competes with another kind. There is imperfect competition in the market. At the same time, the market is divided between several companies that have better access to materials and consumers. Let's talk about what imperfect competition is and its types.
With imperfect competition, individual companies can influence pricing. There are several types of it.
Monopoly is one of the largest types of imperfect competition. At the same time, one company can control a single industry and, accordingly, marketing products. This manufacturer is the only one in this market, and it has no competitors. This type of competition is very rare. Basically, this happens with the assistance of the state. For example, the release of a proprietary drug. In today's market there is intense competition and its types, so monopolists have to withstand the attacks of other companies and over time they reach the goal.
Oligopoly is another type of imperfect competition, which is much more common. Moreover, the number of manufacturers is much larger. These can be two or more companies. A large assortment of one or another type of product may exist on the market, but only a few companies will produce it. They are also pricing managers. Competition in this case also manifests itself clearly. These companies are fighting among themselves for the consumer of a product or service.
Another type is monopolistic competition. At the same time, there are many manufacturers on the market, but the choice of the consumer depends on the location of the product or service. Each consumer chooses a convenient method of purchase.
Mostly there is perfect competition in the market. Market competition and its types are as follows.
Functional competition means different ways to meet consumer needs.
Specific competition is based on differences in the appearance of identical goods from different manufacturers.
Product competition is the struggle between similar products, which is based on quality.
Price competition is a consequence of cost reduction in order to attract buyers.
There are illegal methods of competition. They are based on the creation of advertising that negatively characterizes a competitor’s product. This also includes the fake goods of other companies.
Competition and its types are present to one degree or another on the market. It is an engine for developing market relations, improving the production process, quality and reducing the cost of goods and services.