About competition and its types
All over the world there is a place for such a concept as “competition”. Under it understand the economic processes of interaction, as well as the struggle and interconnection in market conditions between various enterprises.
They are necessary to provide the best possible opportunities in order to meet the necessary needs among potential buyers. They are important in the marketing of products. In the field of modern market there are various types of competition, which will be discussed below.
Competition involves the conduct of some economic struggle between different enterprises for the best conditions in the production process, purchase procedures, as well as sales. Types of competition in the economy are quite diverse. They are divided into various parameters and characteristics.
They perform the following tasks:
- on the market reveal the value of the goods or it is set;
- distribute the amount to the profit relative to the labor costs incurred;
- between different industries regulate the flow of funds relative to the industry.
Competition is also responsible for the process of equalization of a specific cost.In accordance with all of the above, it is customary to single out its following areas: a number of areas for sales and the provision of services and goods, commodity markets, as well as the buyers themselves.
With respect to competition, the concept and types are strictly subdivided. Regarding development processes, it is customary to distinguish regulated and free species. And there is a division on the price and non-price.
1 basically arises in a certain way, by means of which prices are artificially knocked down, and the cost of a particular product falls. It is used in the field of various services. In the sale of goods that are not transmitted by redistribution, the price type is also used.
Non-price provided by improving the quality of products, the introduction of new technologies in the production process, as well as through patenting and branding. The procedure for improving the quality and service of sales processes and sales areas also play a role. To date, competition is divided into a number of classifications.
The 1st classification concerns the scale of development.
Classification of types of competition.
According to her unit is as follows:
- Individual. This type implies a market situation in which only 1 specific participant tries to take a place, choosing the best conditions for the materials produced regarding the process not only sales, but also in the purchase.
- National. This is a competition in which domestic commodity owners lead a competing process within a particular country.
- Sectoral. There is a competitive form of struggle. He is for obtaining maximum income in a particular market industry.
- Intersectoral. There is already a struggle being waged by representatives from different industries.
- Local This refers to a certain territory and competition on it between the commodity owners.
- Global. It covers the entire world market and the struggle in it among specific enterprises, associations and states.
About competitive equilibrium
Compliance in the market conditions of competitive equilibrium allows competition to allocate in the form of perfect and imperfect.Under the phrase perfect competition understand the implementation of competitive equilibrium.
- providing opportunities for free trade through various production factors;
- the presence in the plural not only of the manufacturer, but also of its consumer;
- the presence of homogeneity of the produced material and its comparability;
- the possibility of independence for economic entities;
- availability of all market information.
The main difference from perfect competition imperfect will be a violation of all the listed items. Characteristic will be the separation of the market among the largest firms or the presence of complete domination. With this competition, enterprises are limited in autonomy, and there is a process of control over market segments.
About the ratio
The market of services allows the processes of supply and demand to distinguish certain types in competition: pure, mono- and oligopolistic. Only the first applies to perfect competition. It is the pure form that is considered to be perfect competition, since the number of sellers as well as buyers is not a significant factor putting pressure on price policy.
In this form there are products that do not have a strict differentiation and absolute interchangeability. And they are sold at prices that determine the process of the relationship between demand and supply. Market power is completely absent. This competition includes industries with low levels of monopolization and concentration of production: light industry, food and household.
Monopolistic competition is characterized by the fact that it is characterized by a large number of competitors with an almost equal number of forces, and the products have a clear differentiation in terms of the quality parameters and the strength of their brand. The range and quality of services provided with specific technical characteristics also matter.
Monopoly on magic.
This allows the leading company not only to get maximum performance on profits, but also serves as a good defense. An example is the transport, energy, and communications industries. A small number of competitors with strong interconnection and great strength in the structure of the market distinguishes the oligopolistic form from others.
Here there is a certain reaction of any company in response to actions taken from a competitor.It is the produced force with which firms react, as well as some similarity of goods and their limited number in terms of types and sizes, is a characteristic feature of an oligopolistic type. Examples include the chemical industry, mechanical engineering, metalworking and others.
Therefore, in a number of sectoral structures and in some areas of activity, the competing process can be difficult and even impossible. It can be connected with technological features in different industries, requiring economy on an industrial scale, which only manufacturers of very large size in the field of transport, communications, energy and so on can afford.
Another reason can be very significant costs. And they can not be returned. They are represented by assets in the bulk of production that have significant specificity. Therefore, they cannot be reoriented to another type of product or type in the field of the market.
In the production of excess capacity to cover the maximum maximum requirements for products or a range of services can also make the process of creating perfect competition impracticable.As a result of all the above, a number of necessary conditions are created for the formation of monopolies.
It is accepted to subdivide them into three types:
- Natural. It occupies a special niche in the economic sphere, which becomes possible due to its specific role in it, and also because of its unique properties. It occurs in cases when owners or subjects have rare and even non-replicable resources.
- Innovative. It is a special type among monopolies with competition, in which only 1 manufacturer is opposed to a significant number of buyers. This is possible in the presence of a product with unique. But such a monopoly
- Artificial. With this type of monopoly, the objects that determine economic relations are concentrated in the same hands.
Any monopoly in the market always has an impact on a particular enterprise of a positive or negative nature. In the case of a positive impact, unit costs through savings in large volumes of production are reduced, and the interests of society in a particular industry begin to be effectively realized.
Negative influence is created by specific conditions. When they are among the consumers of the final link violated basic rights. A typical example is the inflated prices. This is done by artificially understating sentences. The result in the development of the market becomes a certain structural disproportion.
Subjects and needs
Types of competition.
Economic entities in the areas of production or sales have a certain ratio relative to the applied capital, which allows us to distinguish 2 more types of competition: inter-and intra-industry.
The first arises between entrepreneurs working in various areas of production, when they are fighting for the most profitable application for their capital through the redistribution of profits.
About intra-industry competition they say in the presence of a struggle for conditions for the sale and production of products of a more favorable nature. It occurs between the subjects of the same industry. This creates a number of possibilities for setting the value that equilibrium and well-knownness characterize.
Weak floor inside.
All product requirements determine vertical and horizontal views.market competition. Vertical mark among manufacturers producing goods of excellent quality among themselves. They cover several identical customer requirements at once. An example would be a magazine and a television set that equally well covered the need for leisure, education and information.
When competition arises between those who produce the same goods, it is called vertical. It involves the struggle for excellent production according to certain parameters and functional properties of the product. As an example, again serve as a TV, with competing characteristics in the form of size, color, sound quality.
Some more species
The specific product in the ratio of supply, as well as the demand for it allows us to distinguish two more types of competition - sellers and buyers. The following statement works here: the higher the sellers compete, the lower the level of competition among buyers. And in reverse order.
Today it is not a secret to anyone that there is unfair competition in the market, which has recently become more and more common.
There are the following types of unfair competition:
- violation of the organized process of functioning in the production of a competitor;
- dissemination of false information about specific services, products or manufacturers.
Today there is also an indirect discredit, in which the products of one manufacturer are incorrectly compared with the goods that a completely different company has manufactured.
It has long been known that competition is an integral part of the economy and the engine that drives progress. Therefore, it is simply impossible to do without it. It allows the potential buyers to receive the necessary quality of any offered services, as well as goods at the most affordable and attractive price.