The Essence Of Competition And Its Importance .

The market is impossible without competition. American economists Campbell R. McConnell and Stanley L. Brue argue that "the essence of competition is the dispersal of economic power within the components of the economy two main populations – enterprises and households. European Union might disagree with that approach. When a particular market is a large number of buyers and sellers, none of the buyer or the seller is unable to produce the demand or supply in such quantity product, which would be sufficient to significantly affect the price.

" Competition – the economic struggle, the rivalry between isolated producers of products and services to meet their interests, related to the sale of these products, the implementation of these works. Its main function is to determine the economic regulators, which are the prices, the rate of profit, interest, etc. Competition implies a free entry into economic units in any particular industry, and freedom out of it. This freedom is essential to the economy could properly adapt to changing tastes consumers, technology, supply of resources. The main economic advantage of the market system is its constant promotion of production efficiency.

Competition as an economic process encompasses all phases of reproduction (production, distribution, exchange and consumption). If we talk about the phase of production, the level of competition depends largely on the life cycle of goods, which is divided into four phases: 1) the introduction of products – a manufacturer tries to produce better products than competitors, for this phase is characterized by small volumes of sales, and 2) growth phase – when there is an increase volume production, growing demand, while manufacturers try to outrun their competitors in terms of production and sales, and 3) the phase of maturity – the volume of production reaches a maximum, and 4) aging – the demand for products reduced to a minimum volume of output is reduced, the level of competition subsides. Market competition has advantages and disadvantages. Benefits of competition: – promotes more efficient use of resources – is the need to respond flexibly and quickly adapt to changing conditions of production – creating conditions for the optimal use of the achievements of std – provides the freedom to choose consumers and producers – is targeting manufacturers to meet the different needs and to improve the quality of goods and services. Disadvantages of competition: – does not contribute to the conservation non-renewable resources (forests, wildlife, water resources, etc.) – a negative impact on the environment – does not ensure the development of products and services for communities (dams, public transport, road) – not guarantees the right to leisure, work, income – does not contain any mechanisms for preventing the emergence of social injustice and the stratification of society into rich and poor.

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