Tondaleria Marcus Economics November 13, 2003 Competition is the freedom to produce and the freedom to trade what one has produced for one’s own self interest, in the pursuit of one’s own happiness. Politically speaking, competition is a consequence of the political right to life, liberty, and the pursuit of happiness; especially when it is applied to the economic sphere of production and trade. Competition among producers is not done out of service to consumers, which is the end result, but because of self-interest-the profit motive. This also results in a free market or free trade.
Free market competition also assumes a social system that is based on individual rights and these rights have to be protected by the government. It does not make sense to produce goods if one does not have the right to keep what has been created, the right to advertise, the right to trade goods on one’s own terms, but more importantly the right to benefit from what has been produced. Without individual rights, free competition is an contradiction in terms. Also, if one does not believe in individual rights then competition takes on an entirely different meaning. For many of us, competition is the absence of market power. In a competitive market, no one firm possesses market power.
The Essay on Historical Perspectives: Benefits, costs, and impact of free international trade
Our world has become a village and the globalization movement has picked up momentum requiring governments and individuals alike to adapt to these changes in the understanding that their growth or indeed survival depends on it. Globalization has been fuelled by a consistent practice of free trade whose growth necessitates breaking down several legal and fiscal barriers in order to make cooperation ...
In competition, monopoly power is absent. In perfect competition, each and every participant lacks any power that would directly influence product price or quality. It is the exact opposite of a monopoly where one has the power to name their price without having to worry about whether or not it will encourage customers to seek to business elsewhere. It is the model of what would be considered as “perfect competition’ that is the heart of the law of supply and demand and has driven the government to maintain competition. For example, one knows when a price is too high but the competitive entry of a new company or the threat of entry can actually reveal what is the lowest price that the market can sustain. As long as entry into the market is open, those existing companies that are trying to keep the high prices may unknowingly attract no entrants into the market that will prove that lower prices can be obtained.
With competition, those few powerful firms can be dissuaded from setting high prices that consumers cannot pay.
