Price warA price war is a form of market competition in which companies within an industry engage in aggressive pricing strategies, “characterized by the repeated cutting of prices below those of competitors”. This leads to a vicious cycle, where each competitor attempts to match or undercut the price of the other. Competitors are driven to follow the initial price-cut due to the downward pricing pressure, referred to as “price-cutting momentum”. Heil and Helsen (2001) proposed that a price war exists only if one or more of a set of qualitative conditions are satisfied.
Competition regulatorA competition regulator is the institution that oversees the functioning of markets. It identifies and corrects practices causing market impediments and distortions through competition law (also known as antitrust law). In general it is a government agency, typically a statutory authority, sometimes called an economic regulator, that regulates and enforces competition laws and may sometimes also enforce consumer protection laws. In addition to such agencies, there is often another body responsible for formulating competition policy.
Market powerIn economics, market power refers to the ability of a firm to influence the price at which it sells a product or service by manipulating either the supply or demand of the product or service to increase economic profit. To make it simple, companies with strong market power can decide whether higher the price above competition levels or lower their quality produced but no need to worry about losing any customers, the strong market power for a company prevents they are involving competition.
Tacit collusionTacit collusion is a collusion between competitors, which do not explicitly exchange information and achieving an agreement about coordination of conduct. There are two types of tacit collusion – concerted action and conscious parallelism. In a concerted action also known as concerted activity, competitors exchange some information without reaching any explicit agreement, while conscious parallelism implies no communication. In both types of tacit collusion, competitors agree to play a certain strategy without explicitly saying so.
Market concentrationIn economics, market concentration is a function of the number of firms and their respective shares of the total production (alternatively, total capacity or total reserves) in a market. Market concentration is the portion of a given market's market share that is held by a small number of businesses. To ascertain whether an industry is competitive or not, it is employed in antitrust law and economic regulation. When market concentration is high, it indicates that a few firms dominate the market and oligopoly or monopolistic competition is likely to exist.
DemandIn economics, demand is the quantity of a good that consumers are willing and able to purchase at various prices during a given time. The relationship between price and quantity demand is also called the demand curve. Demand for a specific item is a function of an item's perceived necessity, price, perceived quality, convenience, available alternatives, purchasers' disposable income and tastes, and many other options. Innumerable factors and circumstances affect a consumer's willingness or to buy a good.
Competition (biology)Competition is an interaction between organisms or species in which both require a resource that is in limited supply (such as food, water, or territory). Competition lowers the fitness of both organisms involved since the presence of one of the organisms always reduces the amount of the resource available to the other. In the study of community ecology, competition within and between members of a species is an important biological interaction.
Demand curveIn a demand schedule, a demand curve is a graph depicting the relationship between the price of a certain commodity (the y-axis) and the quantity of that commodity that is demanded at that price (the x-axis). Demand curves can be used either for the price-quantity relationship for an individual consumer (an individual demand curve), or for all consumers in a particular market (a market demand curve). It is generally assumed that demand curves slope down, as shown in the adjacent image.
Competitive equilibriumCompetitive equilibrium (also called: Walrasian equilibrium) is a concept of economic equilibrium, introduced by Kenneth Arrow and Gérard Debreu in 1951, appropriate for the analysis of commodity markets with flexible prices and many traders, and serving as the benchmark of efficiency in economic analysis. It relies crucially on the assumption of a competitive environment where each trader decides upon a quantity that is so small compared to the total quantity traded in the market that their individual transactions have no influence on the prices.
Interspecific competitionInterspecific competition, in ecology, is a form of competition in which individuals of different species compete for the same resources in an ecosystem (e.g. food or living space). This can be contrasted with mutualism, a type of symbiosis. Competition between members of the same species is called intraspecific competition. If a tree species in a dense forest grows taller than surrounding tree species, it is able to absorb more of the incoming sunlight.
