What is the competition market?

In economics, the competition market is a business theory, where the market has few competitors, but has a high threat to entry. As a result, businesses tend to be competitive. This prevents the monopoly on the market and ensures that products have competitive prices and quality.

In order for the market to have a high threat of entry, several criteria must be met. First, new suppliers must be able to enter and get off without great costs. The sunk costs of establishing a new business should be minimal. The sunk costs are invaluable costs incurred when entering the market. In the perfectly questionable market, entry and outputs would be free of charge.

Second, all the information and technologies needed to produce goods of the same quality should be available to all competitors. No producer should have technological superiority. This is virtually impossible to see in reality, because businesses generally seek to maintain every competitive advantage they have.

Finally, new suppliers must be allowed to customizeto. They must have free access to customers of the existing company and advertise them without costs. This discourages a coercive monopoly.

Support market is characterized by its susceptibility to hit and start input. When the market becomes lucrative for the existing company, new suppliers suddenly enter it to earn profits. After the market is exhausted, suppliers then leave for virtually no costs.

There are basic differences between questionable markets and perfect competition. The producer can set prizes on the competition market, while in perfect competition, prices are dictated by competitors. The size of the company is irrelevant in the questionable market. On the other hand, the size of companies will be relatively uniform in perfect competition. In addition, the market can be composed of only one manufacturer, and so far, several competitors must have several competitors.

One of the reasons why it is difficult to put into practice is themtheir profitability. The existing company can set the price of the product, but new manufacturers can use it. When we see that technology and market are accessible to all, the new producer can easily conquer the market by selling the same goods at a slightly lower price. The only producer will always feel threatened and act as if there were always several competitors in the field. On the contrary, because companies receive the same income and the same expenses arise, they can decide to increase their profit margins by creating an oligopol.