Revisiting competitive strategy is one way to respond to a more competitive market. For example, in marketing, businesses identify what needs to be adapted to be relevant to today's competition and customer needs, whether related to the product,
Market Structure
Why are some markets becoming more competitive?
Some markets become competitive for several reasons. Globalization is the first reason. It makes the competition map wider because it involves foreign players. For example, it encourages foreign goods to easily enter the domestic market, increasing
Competitive Market: Characteristics and Examples
What it's: A competitive market refers to a market characterized by intense competition in which no player has a dominant power. It is identified as a perfectly competitive market with many buyers and sellers. And they individually cannot
Monopoly: Meaning, Examples, Characteristics, Causes, Advantages, Disadvantages
What's it: a monopoly is a market structure with only one seller and serving many buyers. The seller is called a monopolist. Unlike in perfectly competitive markets, the monopolist has absolute control over market supply and prices. Since there
Social Cost in Economics: Meaning, Components, Formulas, and Effects
What's it: Social cost is private cost plus external cost. Private cost is borne by individuals directly involved in economic transactions or activities. Meanwhile, the external cost is borne by third parties not directly involved in the
Ease of Entry: Meaning, Impacts, Determinants
What's it: Easy of entry refers to the level of difficulty a company has to enter into an industry or market. It is important because it affects the intensity of competition and profitability in the market. When new entrants enter, they bring in
Free Rider: Meaning, Examples, Impacts and Possible Solutions
What's it: Free rider is someone who gets benefit from a product at no cost. It appears in the public good because people are free to benefit from the goods without paying. When you consume it, it does not reduce the benefits received by others.
First-Degree Price Discrimination: Examples, Prerequisites, Problems
What's it: First-degree price discrimination is a type of price discrimination in which producers charge each customer the highest price they are willing and able to pay. We also call this perfect price discrimination. Types of price
Horizontal Price Fixing: Meaning, Examples, Impacts
What's it: Horizontal price-fixing is an agreement between businesses, either explicitly or implicitly, to set the selling price for a product or service. In this case, an agreement occurs between companies under the same value chain level, for
Imperfect Competition: Characteristics, Types
What's it: Imperfect competition is a market structure in which sellers or buyers have market power over prices, which prevents the market from operating under perfect competition. Because they have market power, market participants are often in
Duopoly: Examples, Characteristics, Types, Implications
What's it: Duopoly is a market structure in which only two sellers (producers). This is the basic form of oligopoly competition. The two players serve multiple buyers and sell competing goods and services. In this market, players have a high
Market Power: Determining Factors, Effects, How to Measure
What's it: Market power is the firm's ability to influence its products' prices in the market. Market power enables firms to charge a higher price than the equilibrium price in a competitive market. We call companies having market power as
Government Intervention: Examples, Reasons, and Impacts
What's it: Government intervention refers to the government's deliberate actions to influence resource allocation and market mechanisms. It can take many forms, from regulations, taxes, subsidies, to monetary and fiscal policy. In some cases, the
Price Taker: Meaning, Characteristics, and Examples
What's it: A price taker refers to a firm that cannot influence market prices and can only set an output price at the market price. All firms in perfect competition are price taker. Conversely, in imperfectly competitive markets, some firms
Strategic Entry Barrier: Concept, Types, Examples
What's it: Strategic entry barrier is actions taken by existing companies (incumbents) to deter new players from entering their market. It can take various forms, such as limit pricing, product differentiation, and loyalty schemes. Another term
Barriers to Entry: Types, and Impacts on Competition
What's it: Barrier to entry is an obstacle that prevents or minimizes the opportunities for a new company to enter a market. A barrier arises because it is deliberately created by existing companies (incumbents) through predatory pricing and
Herfindahl-Hirschman Index: Concept, How to Calculate, Pros and Cons
What's it: Herfindahl-Hirschman Index (HHI) is a measure of market concentration. You compute it by summing the squares of each firm's market share in the industry. This is an alternative to the n-firm concentration ratio. This index is important
Nash Equilibrium: Meaning, Concept and Examples
What's it: Nash equilibrium is a game theory concept that determines the optimal solution in non-cooperative competition in which each player has no incentive to change their initial strategy. John Nash, an American mathematician, put it in
Collusion: Meaning, Influencing Factors, Types, Pros and Cons
What's it: Collusion is tacit cooperation or agreement to deceive others and achieve mutual benefits for the parties involved. Such agreements exist to avoid direct competition, reduce market uncertainty, and achieve higher profits. Collusion is
Monopoly Power: Meaning, Sources, and Effects
What's it: Monopoly power refers to a firm's ability to influence market prices. It is weak when the market is made up of many players, and products are relatively homogeneous. Market power is higher when firms operate under an oligopoly, where the
Market Failure: Types, Effects, and Solutions
What's it: Market failure refers to a condition in which the market mechanism doesn't work, thus creating inefficiency in the market. Demand, supply, and price aren't in equilibrium. As a result, markets fail to allocate economic resources most