Competition in the Market is Beneficial for Consumers
In the capitalist driven society that most of us live in today, competition is a major driving force that influences the actions of each individual in the market. Whether one is a supplier or a consumer, one’s choices, and more importantly, life itself is affected by competition. Competition is defined as the “contest between individuals, groups, animals, etc. for territory, a niche, or a location of resources”. Although each culture is taught differently on the aspects of competition, it is undisputable that competition is a big part on one’s life. Whether it’s going to the store to buy milk or getting the car fueled, competition (or lack of competition) will determine the prices and possible choices for consumers. Competition in the market is efficient and beneficial for the consumer in the sense that it decreases market price, increase suppliers incentive to work, which contributes to better quality of goods. As competition increases in supplying a product, the price and value of that product will decrease. Price is the amount required to acquire a quantity of goods; which reflects the consumer’s willingness to pay. Because a value of a good is reflected by price in the world of capitalism, as price decreases, value will also decrease. This shows how people are less willing to pay for what is abundant in the market. It is similar to the market for money. If more money is printed in an economy, the value of that currency will decrease (also known as inflation). Therefore, if a product is abundant, suppliers will be forced to push down price to attract more customers. Hence, this new price will represent the market value of the good. As all suppliers do this, the process goes on until the lowest price is reached and only some suppliers survive in the market. In contrast, if there was only one supplier, the price would be set above its true value. Ultimately, competition will benefit the consumer by forcing suppliers to set a lower price. With more competition in the market, suppliers are forced to work harder to make profit, hence making better quality products. According to Mankiw, the competitiveness in the market raised the quality of the goods. It can be said that these better quality products are the side effects of competition. It is hard to imagine that a supplier would work as hard if he or she is the only supplier in the market. Therefore with competition, suppliers will produce better or more varied products to make themselves more profit. If every supplier acts this way, there will eventually be more choices of goods for consumers in the market. Even though competition decreases price, and produces better quality of goods, there are socially negative effects such as unemployment. In a competitive market, as mentioned earlier, prices may be driven down to the point where small companies are unable to compete with large scale companies. This example is seen in the