How does competiotion benefit and regulate the marketplace?



Answer:
Intense competetion is the best regulator. When firms compete, no firm can sell at a higher price than other. Nor can they sell shoddy goods or bad quality goods because there will always be someone who would compete away customers with better products and provide better after-sales service. Competeition brings in more infomation to buyers about the market place so that the buyers can buy the best good at the cheapest price. Competetion also means that the firms are always under pressure to reduce cost, improve quality and innovate and bring in more economically effecicient technology and inputs. So, the society gains from competetion. The weak, the inefficient, the cheats and the dull producers are thrown out of the market if there is intense competeion in the market. The producers also gain if there is competition among buyers because they can sell their were to the buyer who is willing to pay more or highest for the product. If instead there were few buyers, then they could exploit the producers by bargaining for the least price. Often the Govt. as a major buyer makes producers suffer losses. So competetion is the best regulators.
Each producer will try to out do the competition in price & quality so buyers will buy their product {s] first. This tends to keep prices down & quality up.

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