Why do economists consider competition to be such a desirable condition in the marketplace?

Question

Why do economists consider competition to be such a desirable condition in the marketplace?

Answer 1

Competition lowers prices. Lack of competition keeps prices high and will also lead to reduced quality.

If you have 100 selling bicycles, you better believe all of them will be competing on price to win your business. Those who have the highest price won't make a sale and will go out of business. The lowest price folks will remain in business.

This is why Walmart destroys small town mom and pop shops because Walmart can out compete on price. Great for the consumer, bad news for the higher priced retailer.

Answer 2

Because it is what drives innovation and the need to produce at lower cost. You'll notice that highly competitive industries (e.g. technology) feature high levels of innovation and falling costs versus industries with low competition (e.g. education) that do not innovate quickly and have rising costs.

Answer 3

Because they are stupid. Competition sucks it makes a lot of really good companies shut down, good people lose jobs,good TV shows get cut, good singers don't get record deals, I could go on for quite a while.

Everyone should have a chance to do they want not just the one who has the most money or the one with the blondest hair or whatever.

Answer 4

There a whole semester in economics that speaks to this question. The answer is too big for here. Lets just say the completion is the best system but not necessarily a good system.

Answer 5

competition ensures the quality of goods. The more competition, the better the product.

Answer 6

There are two reasons that economists consider competition a desirable condition.

1. Theory - its a long story but I could explain to you why competition will provide lower prices, better goods and services, etc.

2. Observation - the theory is backed up with overwhelming empirical evidence.  Its not debatable.  You can look anywhere in the world that you want to and find all the evidence you need if you care to look and keep an open mind.  Competition provides a better product for a better price other things being equal.