Concept: competition

Competition is the allocation of productive resources to their most highly valued uses and encouraging efficiency. Microeconomics theory distinguishes between perfect competition and imperfect competition, concluding that no system of resource allocation is more efficient than perfect competition. Competition, according to economic theory, causes commercial firms to develop new products, services and technologies, which would give consumers greater selection and better products. The greater selection typically causes lower prices for the products, compared to what the price would be if there was no competition (monopoly) or little competition (oligopoly).

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competition | cost-benefit analysis | rationality