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Competition

Competition describes the interaction between sellers in markets, as each party tries to increase their own profits and market share. Sellers will alter price, distribution, advertising, and product in order to beat out the other sellers and obtain their goals. Competition forces firms to create new products or services, or improve their existing ones.

Competition has been separated into perfect competition and imperfect competition. Perfect competition is when a market does not have a firm that has the power to be a price setter and imperfect competition is where firms are able to gain some market power. 

Economic competition can be defined as one of three types. The first is direct competition, which is when a product has the same function as another, making the two products each other’s competitor. The second is substitute competition, when a product and its substitute are in competition with each other. The third form of competition is budget competition, which is the broadest of the three because a product is in competition with anything a consumer will spend money on. Competition does not always exist between firms because a company can have internal competition between two of its own products.

In a monopoly, competition does not exist, most often because of some sort of government production that inhibits other firms from entering the market.

Competition is an important element in economics because it regulates market activity and also maintains or increases quality and utility of product and services.

Categories within Competition

Monopolies

Postings: 220

A monopoly is when a market is dominated by a single seller (the monopolist).

Oligopoly

Postings: 75

An oligopoly is when a market is dominated by a small number of sellers (oligopolists).

Perfect Competition

Postings: 111

Perfect competition is an economy has no firms that have enough market power to be price setters.

Coca Cola's Market Structure Based on Annual Report to Stockholders

Based on Coca-Cola's annual report to stockholders on its web site: • Does the company have characteristics of a perfect competition, monopoly, or oligopoly? • How does competition in this industry help or hurt consumers? • What does the annual report say about the corporation's view of future business challenges and

Competition using Price and Non-Price Means

Using cable providers, Dish Network and Direct TV, can you please explain/discuss how that market competes for your business through (1) price and (2) non-price means? Thank you!

Tariff details are presented.

"A tariff on imports of a product hurts domestic consumers of this product more than it benefits domestic producers of the product." Do you agree or disagree? Explain why you do/don't.

The Competitive Market

For Profit Labs, Inc. (FPL) is a private laboratory that does only routine blood count. With total assets of $8 million last year, FPL took in $3 million in revenue and had expenses of $2 million. The average firms in other industries make a return of only 10 percent on their assets. The market for lab services is potentially

Evaluate the decision by Google to buy Motorola.

a) By drawing upon your economic understanding of business, identify and explain the main motivations for firms to grow. b) Evaluate the decision by Google to buy Motorola. What economic concepts would support this investment and in your opinion why might the purchase of Motorola be anti-competitive?

Public Administration and Politics

Public administration cannot exist outside of its political context. Discuss how politics affects the policy making process and the delivery of governmental services.

While there is a degree of differentiation among general merchandise retailers like Target and Kmart, weekly newspaper circulars announcing sales provide evidence that these firms engage in price competition. This suggests that Target and Kmart simultaneously choose to announce one of two prices for a given product: a regular price or a sale price. Suppose that when one firm announces the sale price and the other announces the regular price for a particular product, the firm announcing the sale price attracts 50 million extra customers to earn a profit of $5 billion, compared to the $3 billion earned by the firm announcing the regular price. When both firms announce the sale price, the two firms split the market equally (each getting an extra 25 million customers) to earn profits of $1 billion each. When both firms announce the regular price, each company attracts only its 50 million loyal customers and the firms each earn $3 billion in profits. If you were in charge of pricing at one of these firms, would you have a clear-cut pricing strategy? If so, explain why. If not, explain why not and propose a mechanism that might solve your dilemma. (Hint: Unlike Wal-Mart, neither of these two firms guarantees "Everyday low prices.")

While there is a degree of differentiation among general merchandise retailers like Target and Kmart, weekly newspaper circulars announcing sales provide evidence that these firms engage in price competition. This suggests that Target and Kmart simultaneously choose to announce one of two prices for a given product: a regular pr

You want to invest in a hotdog stand near the ballpark. You have a 0.35 probability that you can turn your current $15,000 into $50,000 and a 0.65 probability that fierce competition will drive you to ruin, losing all your money. If you decide not to enter, you keep your $15,000. Would you enter the market?

You want to invest in a hotdog stand near the ballpark. You have a 0.35 probability that you can turn your current $15,000 into $50,000 and a 0.65 probability that fierce competition will drive you to ruin, losing all your money. If you decide not to enter, you keep your $15,000. Would you enter the market?

Dealing with negative criticism arising out of unfair competition

Please help answer the following question. How might a WalMart representative respond to the negative criticism that might arise as a result of sighting a new facility in a community ranging from traffic congestion to anti-union sentiment to unfair competition?

Antitrust Policy Problems

Explain 2 problems with the antitrust policy. PLEASE DO NOT USE WIKIPEDIA, ENCARTA OR WORLD BOOK FOR CITATIONS

Six-Firm Concentration Ratio and Herfindahl-Hirschman Index

Assume the market shares of the six largest firms in an industry are 12 percent each. Calculate the six-firm concentration ratio and Herfindahl-Hirschman index for this industry. What does each of these measures have to say about the degree of concentration in the industry? Explain.

Decision Criterion

Although Ken Brown (discussed in problem 3-16) is the principal owner of Brown Oil, his brother Bob is credited with making the company a financial success. Bob is vice president of finance. Bob attributes his success to his pessimistic attitude about business and the oil industry. Given the information in problem 3-16, it is li

Description of an industry with 20 firms and the CR is 20.

Suppose you have an industry with 20 firms and the CR is 20. How would you describe this industry? Suppose the demand for the product rises and pushes up the price for the good. What long-run adjustments would you expect following this change in demand? What does your adjustment process imply about the CR for the industry?

Government intervention in the market

8.List five ways you are affected on a daily basis by government intervention in the market. For what reason might government be involved? Is that reason justified?

E-Learning Overview

Select an organization or industry (I HAVE CHOSEN E-LEARNING) and have access to its financial information. Prepare an organization and/or industry overview on your selected organization and/or industry. Be sure to include: a. A history of the organization and/or industry (ABOUT 300 words) b.The amount of competition in t

How Advertisement Functions as a Signal to a Potential Buyer

In each of the following cases, explain how the advertisement functions as a signal to a potential buyer. Explain what information the buyer lacks that is being supplied by the advertisement and how the information supplied by the advertisement is likely to affect the buyer's willingness to buy the good. a. "Looking for work. E

Competition Example Problem

Suppose you ran the only bakery in town. Further suppose that it was currently very profitable. A. What things might you consider if you wanted to ensure that you continued to enjoy the same success in the future? B. What might you do to head off competition?

The type of accounting quantitative data you will need to evaluate this decision.

Problem:You have been asked to apply your decision-making skills and analysis to the merchandising of JMI's travel product stores. Much of the floor display space is taken up by the innovations department whi ...there is moreshow problemYou have been asked to apply your decision-making skills and analysis to the merchandising of

Financial Analysis

The Hart Mountain Company has recently discovered a new type of kitty litter which is extremely absorbent. It is expected that the firm will experience (beginning now) an unusually high growth rate (20 percent) during the period (3 years) it has exclusive rights to the property where the raw material used to make this kitty litt

Microsoft and Intel: Competition or Coordination

Suppose Microsoft can produce a new sophisticated sofeware product. However, it wants to do so only if Intel produces high speed microprocessors. Otherwise, the software will not sell. Intel, in turn, wants to produce high-speed microprocessor only if there is popular softwar on the market that requires high speed processing. Is

Explore a hypothetical merger

There are 10 auto firms in this problem each showing their market share percentage (US auto industry).The proposed merger involves Ford 22% and BMW 1%. It is noted that Ford includes Mercury, Lincoln, Volvo, Jaguar and BMW includes Mini Cooper.The pre merger index involves all ten firms and equals 1,758 according to my calculati