TheInfoList

In
economics Economics () is the social science that studies how people interact with value; in particular, the Production (economics), production, distribution (economics), distribution, and Consumption (economics), consumption of goods and services. ...
, competition is a scenario where different economic firmsThis article follows the general economic convention of referring to all actors as firms; examples in include individuals and brands or divisions within the same (legal) firm. are in contention to obtain goods that are limited by varying the elements of the marketing mix: price, product, promotion and place. In classical economic thought, competition causes commercial firms to develop new products, services and technologies, which would give consumers greater selection and better products. The greater the selection of a good is in the market, prices are typically lower for the products, compared to what the price would be if there was no competition (
monopoly A monopoly (from Greek el, μόνος, mónos, single, alone, label=none and el, πωλεῖν, pōleîn, to sell, label=none) exists when a specific person or enterprise is the only supplier of a particular commodity. This contrasts with a m ...
) or little competition (
oligopoly An oligopoly (from Greek ὀλίγος, ''oligos'' "few" and πωλεῖν, ''polein'' "to sell") is a market form wherein a market or industry is dominated by a small group of large sellers (oligopolists). Oligopolies can result from various ...
). This is because there is now no rivalry between firms to obtain the product as there is enough for everyone. The level of competition that exists within the market is dependant on a variety of factors both on the firm/ seller side; the number of firms, barriers to entry, information availability, availability/ accessibility of resources. The number of buyers within the market also factors into competition with each buyer having a willingness to pay, influencing overall
demand In economics Economics () is the social science that studies how people interact with value; in particular, the Production (economics), production, distribution (economics), distribution, and Consumption (economics), consumption of goods ...
for the product in the market. Competitiveness pertains to the ability and performance of a firm, sub-sector or country to sell and supply goods and services in a given market, in relation to the ability and performance of other firms, sub-sectors or countries in the same market. It involves one company trying to figure out how to take away
market share Market share is the percentage of a market (defined in terms of either units or revenue) accounted for by a specific entity. "Marketers need to be able to translate and incorporate sales targets into market share because this will demonstrate ...
from another company. The extent of the competition present within a particular market can measured by; the number of rivals, their similarity of size, and in particular the smaller the share of industry output possessed by the largest firm, the more vigorous competition is likely to be. Early economic research focused on the difference between price- and non-price-based competition, while modern economic theory has focused on the many-seller limit of general equilibrium.

# Firm competition

Empirical observation confirms that resources (capital, labor, technology) and talent tend to concentrate geographically (Easterly and Levine 2002). This result reflects the fact that firms are embedded in inter-firm relationships with networks of suppliers, buyers and even competitors that help them to gain competitive advantages in the sale of its products and services. While arms-length market relationships do provide these benefits, at times there are externalities that arise from linkages among firms in a geographic area or in a specific industry (textiles, leather goods, silicon chips) that cannot be captured or fostered by markets alone. The process of "clusterization", the creation of "value chains", or "industrial districts" are models that highlight the advantages of networks. Within
capitalist Capitalism is an economic system based on the private ownership of the means of production and their operation for profit. Central characteristics of capitalism include capital accumulation, competitive markets, a price system, private ...
economic systems, the drive of enterprises is to maintain and improve their own competitiveness, this practically pertains to business sectors.

# Perfect vs imperfect competition

## Perfect competition

Neoclassical economic theory places importance in a theoretical market state, in which the firms and market are considered to be in
perfect competition In economics Economics () is the social science that studies how people interact with value; in particular, the Production (economics), production, distribution (economics), distribution, and Consumption (economics), consumption of goods ...
. Perfect competition exists when all criteria are met, which is rarely (if ever) observed in the real world. These criteria include; all firms contribute insignificantly to the market, all firms sell an identical product, all firms are price takers, market share has no influence on price, both buyers and sellers have complete or "perfect" information, resources are perfectly mobile and firms can enter or exit the market without cost. Under perfect competition, there are many buyers and sellers within the market and prices reflect the overall
supply and demand In microeconomics, supply and demand is an economic model In economics, a model is a theory, theoretical construct representing economic wikt:process, processes by a set of Variable (mathematics), variables and a set of logical and/or quan ...

. Another key feature of a perfectly competitive market is the variation in products being sold by firms. The firms within a perfectly competitive market are small, with no larger firms controlling a significant proportion of market share. These firms sell almost identical products with minimal differences or in-cases perfect substitutes to another firms product. The idea of perfectly competitive markets draws in other neoclassical theories of the buyer and seller. The buyer in a perfectly competitive market have identical tastes and preferences with respect to desired product features and characteristics (homogeneous within industries) and also have perfect information on the goods such as price, quality and production. In this type of market, buyers are utility maximizers, in which they are purchasing a product that maximizes their own individual utility that they measure through their preferences. The firm, on the other hand, is aiming to maximize profits acting under the assumption of the criteria for perfect competition. The firm in a perfectly competitive market will operate in two economic time horizons; the short-run and long-run. In the short-run the firm adjusts its quantity produced according to prices and costs. While in the long run the firm is adjusting its methods of production to ensure they produce at a level where marginal cost equals marginal revenue. In a perfectly competitive market, firms/producers earn zero economic profit in the long run.

## Imperfect competition

Imperfectly competitive markets are the realistic markets that exist in the economy. Imperfect competition exist when; buyers might not have the complete information on the products sold, companies sell different products and services, set their own individual prices, fight for market share and are often protected by barriers to entry and exit, making it harder for new firms to challenge them. An important differentiation from perfect competition is, in markets with imperfect competition, individual buyers and sellers have the ability to influence prices and production. Under these circumstances, markets move away from the neoclassical economic definition of a perfectly competitive market, as the market fails the criteria and this inevitably leads to opportunities to generate more profit, unlike in a perfect competition environment, where firms earn zero economic profit in the long run. These markets are also defined by the presence of monopolies, oligopolies and externalities within the market. The measure of competition in accordance to the theory of perfect competition can be measured by either; the extent of influence of the firm's output on price (the elasticity of demand), or the relative excess of price over marginal cost.

# Types of imperfect competition

## Monopoly

Monopoly is the opposite to perfect competition. Where perfect competition is defined by many small firms competition for market share in the economy, Monopolies are where one firm holds the entire market share. Instead of industry or market defining the firms, monopolies are the single firm that defines and dictates the entire market. Monopolies exist where one of more of the criteria fail and make it difficult for new firms to enter the market with minimal costs. Monopoly companies use high barriers to entry to prevent and discourage other firms from entering the market to ensure they continue to be the single supplier within the market. A natural monopoly is a type of monopoly that exists due to the high start-up costs or powerful economies of scale of conducting a business in a specific industry. These types of monopolies arise in industries that require unique raw materials, technology, or similar factors to operate. Monopolies can form through both fair and unfair business tactics. These tactics include;
collusion Collusion is a deceitful agreement or secret cooperation between two or more parties to limit open competition Competition arises whenever two or more parties strive for a common goal A goal is an idea of the future or desired result ...
,
mergers In corporate finance Corporate finance is the area of finance that deals with sources of funding, the capital structure of corporations, the actions that managers take to increase the Value investing, value of the firm to the shareholders, and ...
, acquisitions, and
hostile takeovers In business, a takeover is the purchase of one company A company, abbreviated as co., is a Legal personality, legal entity representing an association of people, whether Natural person, natural, Legal personality, legal or a mixture of both, ...
. Collusion might involve two rival competitors conspiring together to gain an unfair market advantage through coordinated price fixing or increases. Natural monopolies are formed through fair business practices where a firm takes advantage of an industry's high barriers. The high barriers to entry are often due to the significant amount of capital or cash needed to purchase fixed assets, which are physical assets a company needs to operate. Natural monopolies are able to continue to operate as they typically can as they produce and sell at a lower cost to consumers than if there was competition in the market. Monopolies in this case use the resources efficiently in order to provide the product at a lower price. Similar to competitive firms, monopolists produces a quantity at that marginal revenue equals marginal cost. The difference here is that in a monopoly, marginal revenue does not equal to price because as a sole supplier in the market, monopolists have the freedom to set the price at which the buyers are willing to pay for to achieve profit-maximizing quantity.

## Oligopoly

Oligopolies are another form of imperfect competition market structures. An oligopoly is when a small number of firms collude, either explicitly or tacitly, to restrict output and/or fix prices, in order to achieve above normal market returns. Oligopoly can be made up of two or more firms, however, it is a market structure that is very highly concentrated. Only a few firms dominate, for example, major airline companies like Delta and American Airlines operate with a few close competitors, but there are other smaller airlines that are competing in this industry too. Similar factors that allow monopolies to exist also facilitate the formation of oligopolies. These include; high barriers to entry, legal privilege; government outsourcing to a few companies to build public infrastructure (e.g railroads) and access to limited resources, primarily seen with natural resources within a nation. Companies in an oligopoly benefit from price-fixing, setting prices collectively, or under the direction of one firm in the bunch, rather than relying on free-market forces to do so. Oligopolies can form cartels in order to restrict entry of new firms into the market and ensure they hold market share. Governments usually heavily regulate markets that are susceptible to oligopolies to ensure that consumers are not being over charged and competition remains fair within that particular market.

## Monopolistic competition

Monopolistic competition characterises an industry in which many firms offer products or services that are similar, but not perfect substitutes. Barriers to entry and exit in a monopolistic competitive industry are low, and the decisions of any one firm do not directly affect those of its competitors. Monopolistic competition exists in-between monopoly and perfect competition, as it combines elements of both market structures. Within monopolistic competition market structures all firms have the same, relatively low degree of market power; they are all price makers, rather than price takers. In the long run, demand is highly elastic, meaning that it is sensitive to price changes. In order to raise their prices, firms must be able to differentiate their products from their competitors in terms of quality, whether real or perceived. In the short run, economic profit is positive, but it approaches zero in the long run. Firms in monopolistic competition tend to advertise heavily because different firms need to distinguish similar products than others. Examples of monopolistic competition include; restaurants, hair salons, clothing, and electronics.

## Dominant firms

In several highly concentrated industries, a dominant firm serves a majority of the market. Dominant firms have a market share of 50% to over 90%, with no close rival. Similar to a monopoly market, it uses high entry barrier to prevent other firms from entering the market and competing with them. They have the ability to control pricing, to set systematic discriminatory prices, to influence innovation, and (usually) to earn rates of return well above the competitive rate of return. This is similar to a monopoly, however there are other smaller firms present within the market that make up competition and restrict the ability of the dominant firm to control the entire market and choose their own prices. As there are other smaller firms present in the market, dominant firms must be careful not to raise prices too high as it will induce customers to begin to buy from firms in the fringe of small competitors.

## Effective competition

Effective competition exists when there are four firms with market share below 40% and flexible pricing. Low entry barriers, little collusion, and low profit rates. The main goal of effective competition is to give competing firms the incentive to discover more efficient forms of production and to find out what consumers want so they are able to have specific areas to focus on.

# Competitive equilibrium

Competitive equilibrium is a concept in which profit-maximising producers and utility-maximising consumers in competitive markets with freely determined prices arrive at an equilibrium price. At this equilibrium price, the quantity supplied is equal to the quantity demanded. This implies that a fair deal has been reached between supplier and buyer, in-which all suppliers have been matched with a buyer that is willing to purchase the exact quantity the supplier is looking to sell and therefore, the market is in equilibrium. The competitive equilibrium in economic theory is considered to be a part of game theory which deals with decision making of firms in large markets. The overall concept acts as a benchmark for evaluating efficiency in the market and how far off the market is from equilibrium. The competitive equilibrium has many applications for predicting both the price and total quality in a particular market. It can also be used to estimate the quantity consumed by each individual and the total output of each firm within a market. Furthermore, through the idea of a competitive equilibrium, particular government policies or events can be evaluated and decide whether they move the market towards or away from the competitive equilibrium.

# Role in market success

Competition is generally accepted as an essential component of Market process economics, markets, and results from scarcity—there is never enough to satisfy all conceivable human wants—and occurs "when people strive to meet the criteria that are being used to determine who gets what." In offering goods for exchange, buyers competitively bid to purchase specific quantities of specific goods which are available, or might be available if sellers were to choose to offer such goods. Similarly, sellers bid against other sellers in offering goods on the market, competing for the attention and exchange resources of buyers. The competitive process in a market economy exerts a sort of pressure that tends to move resources to where they are most needed, and to where they can be used most efficiently for the economy as a whole. For the competitive process to work however, it is "important that prices accurately signal costs and benefits." Where externality, externalities occur, or monopoly, monopolistic or oligopolistic conditions persist, or for the provision of certain goods such as Public good (economics), public goods, the pressure of the competitive process is reduced. In any given market, Market power, the power structure will either be in favour of sellers or in favour of buyers. The former case is known as a seller's market; the latter is known as a buyer's market or consumer sovereignty. In either case, the disadvantaged group is known as Price taker, price-takers and the advantaged group known as price-setters. Price takers must accept the prevailing price and sell their goods at the market price whereas price setters are able to influence market price and enjoy pricing power. Competition bolsters product differentiation as businesses try to innovate and entice consumers to gain a higher market share and increase profit. It helps in improving the processes and productivity as businesses strive to perform better than competitors with limited resources. The Australian economy thrives on competition as it keeps the prices in check.

# Historical views

In his 1776 ''The Wealth of Nations'', Adam Smith described it as the exercise of allocating productive resources to their most highly valued uses and encouraging x-efficiency, efficiency, an explanation that quickly found support among Economic liberalism, liberal economists opposing the monopolistic practices of mercantilism, the dominant economic philosophy of the time. Smith and other classical economists before Antoine Augustin Cournot, Cournot were referring to price and non-price rivalry among producers to sell their goods on best terms by bidding of buyers, not necessarily to a large number of sellers nor to a market in final equilibrium. Later microeconomic theory distinguished between
perfect competition In economics Economics () is the social science that studies how people interact with value; in particular, the Production (economics), production, distribution (economics), distribution, and Consumption (economics), consumption of goods ...
and imperfect competition, concluding that perfect competition is Pareto efficient while imperfect competition is not. Conversely, by Edgeworth's limit theorem, the addition of more firms to an imperfect market will cause the market to tend towards Pareto efficiency. Pareto efficiency, named after the Italian economist and political scientist Vilfredo Pareto (1848-1923), is an economic state where resources cannot be reallocated to make one individual better off without making at least one individual worse off. It implies that resources are allocated in the most economically efficient manner, however, it does not imply equality or fairness.

# Appearance in real markets

Real markets are never perfect. Economists who believe that perfect competition is a useful approximation to real markets classify markets as ranging from close-to-perfect to very imperfect. Examples of close-to-perfect markets typically include share and foreign exchange markets while the real estate market is typically an example of a very imperfect market. In such markets, the theory of the second best proves that, even if one optimality condition in an economic model cannot be satisfied, the next-best solution can be achieved by changing other variables away from otherwise-optimal values.

## Time variation

Within competitive markets, markets are often defined by their sub-sectors, such as the Term (time), "short term" / "long term", "seasonal" / "summer", or "broad" / "remainder" market. For example, in otherwise competitive market economies, a large majority of the commercial exchanges may be competitively determined by long-term contracts and therefore long-term clearing prices. In such a scenario, a “remainder market” is one where prices are determined by the small part of the market that deals with the availability of goods not cleared via long term transactions. For example, in the sugar industry, about 94-95% of the market clearing price is determined by long-term supply and purchase contracts. The balance of the market (and world sugar prices) are determined by the ''ad hoc'' demand for the remainder; quoted prices in the "remainder market" can be significantly higher or lower than the long-term market clearing price. Similarly, in the US real estate housing market, appraisal prices can be determined by both short-term or long-term characteristics, depending on short-term supply and demand factors. This can result in large price variations for a property at one location.

## Anti-competitive pressures and practices

Competition requires the existing of multiple firms, so it duplicates fixed costs. In a small number of goods and services, the resulting cost structure means that producing enough firms to effect competition may itself be inefficient. These situations are known as natural monopoly, natural monopolies and are usually Public good (economics), publicly provided or tightly regulated. Globalization, International competition also differentially affects sectors of national economies. In order to protect political supporters, governments may introduce protectionist measures such as tariffs to reduce competition.

### Anti-competitive practices

A practice is anti-competitive if it unfairly distorts free and effective competition in the marketplace. Examples include Cartelizes, cartelization and evergreening.

# National competition

Image:Global Competitiveness Index 2008-2009.svg, 350px, Global Competitiveness Index (2008–2009): competition is an important determinant for the well-being of states in an international trade environment. Economic competition between countries (nations, states) as a political-economic concept emerged in trade and policy discussions in the last decades of the 20th century. Competition theory posits that while protectionist measures may provide short-term remedies to economic problems caused by imports, firms and nations must adapt their production processes in the long term to produce the best products at the lowest price. In this way, even without protectionism, their manufactured goods are able to compete successfully against foreign products both in domestic markets and in foreign markets. Competition emphasizes the use of comparative advantage to decrease trade deficits by exporting larger quantities of goods that a particular nation excels at producing, while simultaneously importing minimal amounts of goods that are relatively difficult or expensive to manufacture. Trade Policy can be used to establish unilaterally and multilaterally negotiated rule of law agreements protecting fair and open global markets. While trade policy is important to the economic success of nations, competitiveness embodies the need to address all aspects affecting the production of goods that will be successful in the global market, including but not limited to managerial decision making, labor, capital, and transportation costs, reinvestment decisions, the acquisition and availability of human capital, export promotion and financing, and increasing labor productivity. Competition results from a comprehensive policy that both maintains a favorable global trading environment for producers and domestically encourages firms to work for lower production costs while increasing the quality of output so that they are able to capitalize on favorable trading environments.Trade Policy Subcouncil, "A Trade Policy for a More Competitive America: Report of the Trade Policy Subcouncil to the Competitiveness Policy Council." (1993), 171 These incentives include export promotion efforts and export financing—including financing programs that allow small and medium-sized companies to finance the capital costs of exporting goods. In addition, trading on the global scale increases the robustness of American industry by preparing firms to deal with unexpected changes in the domestic and global economic environments, as well as changes within the industry caused by accelerated technological advancements According to economist Michael Porter, "A nation's competitiveness depends on the capacity of its industry to innovate and upgrade."

## History of competition

Advocates for policies that focus on increasing competition argue that enacting only protectionist measures can cause atrophy of domestic industry by insulating them from global forces. They further argue that protectionism is often a temporary fix to larger, underlying problems: the declining efficiency and quality of domestic manufacturing. American competition advocacy began to gain significant traction in Washington policy debates in the late 1970s and early 1980s as a result of increasing pressure on the United States Congress to introduce and pass legislation increasing tariffs and quotas in several large import-sensitive industries. High level trade officials, including commissioners at the U.S. International Trade Commission, pointed out the gaps in legislative and legal mechanisms in place to resolve issues of import competition and relief. They advocated policies for the adjustment of American industries and workers impacted by globalization and not simple reliance on protection.

### 1990s

Ireland
(1997)
Saudi Arabia
(2000)
Greece
(2003)
Croatia
(2004)
Bahrain
(2005)
the Philippines
(2006)
the Dominican Republic
an

(2011) are just some examples of countries that have advisory bodies or special government agencies that tackle competition issues. Even regions or cities, such a
Dubai
o
the Basque Country
Spain), are considering the establishment of such a body. The institutional model applied in the case of National Competitiveness Programs (NCP) varies from country to country, however, there are some common features. The leadership structure of NCPs relies on strong support from the highest level of political authority. High-level support provides credibility with the appropriate actors in the private sector. Usually, the council or governing body will have a designated public sector leader (president, vice-president or minister) and a co-president drawn from the private sector. Notwithstanding the public sector's role in strategy formulation, oversight, and implementation, national competition programs should have strong, dynamic leadership from the private sector at all levels – national, local and firm. From the outset, the program must provide a clear diagnostic of the problems facing the economy and a compelling vision that appeals to a broad set of actors who are willing to seek change and implement an outward-oriented growth strategy. Finally, most programs share a common view on the importance of networks of firms or "clusters" as an organizing principal for collective action. Based on a bottom-up approach, programs that support the association among private business leadership, civil society organizations, public institutions and political leadership can better identify barriers to competition develop joint-decisions on strategic policies and investments; and yield better results in implementation. National competition is said to be particularly important for small open economies, which rely on trade, and typically foreign direct investment, to provide the scale necessary for productivity increases to drive increases in living standards. The Irish National Competitiveness Council uses
Competitiveness Pyramid
structure to simplify the factors that affect national competition. It distinguishes in particular between ''policy inputs'' in relation to the business environment, the physical infrastructure and the knowledge infrastructure and the ''essential conditions'' of competitiveness that good policy inputs create, including business performance metrics, productivity, labour supply and prices/costs for business. Competition is important for any economy that must rely on international trade to balance import of energy and raw materials. The European Union (EU) has enshrined industrial research and technological development (R&D) in her Treaty in order to become more competitive. In 2009, €12 billion of the EU budget (totalling €133.8 billion) will go on projects to boost Europe's competition. The way for the EU to face competition is to invest in education, research, innovation and technological infrastructures. The International Economic Development Council (IEDC) in Washington, D.C. published the "Innovation Agenda: A Policy Statement on American Competitiveness". This paper summarizes the ideas expressed at the 2007 IEDC Federal Forum and provides policy recommendations for both economic developers and federal policy makers that aim to ensure America remains globally competitive in light of current domestic and international challenges. International comparisons of national competition are conducted by the World Economic Forum, in its Global Competitiveness Report, and the Institute for Management Development, in its World Competitiveness Yearbook. Scholarly analyses of national competition have largely been qualitatively descriptive. Systematic efforts by academics to define meaningfully and to quantitatively analyze national competitiveness have been made,Thompson, E R, 2003
A grounded approach to identifying national competitive advantage
Environment and Planning A, 35, 631–657.
with the determinants of national competitiveness econometrically modeled. A US government sponsored program under the Reagan administration called Project Socrates, was initiated to, 1) determine why US competition was declining, 2) create a solution to restore US competition. The Socrates Team headed by Michael Sekora, a physicist, built an all-source intelligence system to research all competition of mankind from the beginning of time. The research resulted in ten findings which served as the framework for the "Socrates Competitive Strategy System". Among the ten finding on competition was that 'the source of all competitive advantage is the ability to access and utilize technology to satisfy one or more customer needs better than competitors, where technology is defined as any use of science to achieve a function".

## Role of infrastructure investments

Some development economists believe that a sizeable part of Western Europe has now fallen behind the most dynamic amongst Asia's emerging nations, notably because the latter adopted policies more propitious to long-term investments: "Successful countries such as Singapore, Indonesia and South Korea still remember the harsh adjustment mechanisms imposed abruptly upon them by the IMF and World Bank during the 1997–1998 'Asian Crisis' […] What they have achieved in the past 10 years is all the more remarkable: they have quietly abandoned the "Washington consensus" [the dominant Neoclassical economics, Neoclassical perspective] by investing massively in infrastructure projects […] this pragmatic approach proved to be very successful." The relative advancement of a nation's transportation infrastructure can be measured using indices such as the (Modified) Rail Transportation Infrastructure Index (M-RTI or simply 'RTI') combining cost-efficiency and average speed metrics

While competition is understood at a macro-scale, as a measure of a country's advantage or disadvantage in selling its products in international markets. Trade competition can be defined as the ability of a business, firm, Industry (economics), industry, city, State (polity), state or country, to export more in value added terms than it imports. Using a simple concept to measure heights that firms can climb may help improve execution of strategy, strategies. International competition can be measured on several criteria but few are as flexible and versatile to be applied across levels as Trade Competitiveness Index (TCI).

TCI can be formulated as ratio of foreign exchange market, forex (FX) balance to total forex as given in equation below. It can be used as a proxy to determine health of international trade, foreign trade, The ratio goes from −1 to +1; higher ratio being indicative of higher international trade competitiveness. :$TCI = \frac$ In order to identify exceptional firms, trends in TCI can be assessed longitudinally for each company and country. The simple concept of trade competitiveness index (TCI) can be a powerful tool for setting targets, detecting patterns and can also help with diagnosing causes across levels. Used judiciously in conjunction with the volume of exports, TCI can give quick views of trends, benchmarks and potential. Though there is found to be a positive correlation between the profits and foreign exchange market, forex earnings, we cannot blindly conclude the increase in the profits is due to the increase in the forex earnings. The TCI is an effective criteria, but need to be complemented with other criteria to have better inferences.

# Criticism

## Critiques of perfect competition

Economists do not all agree to the practicability of perfect competition. There is debate surrounding how relevant it is to real world markets and whether it should be a market structure that should be used as a benchmark. Neoclassical economists believe that perfect competition creates a perfect market structure, with the best possible economic outcomes for both consumers and society. In general, they do not claim that this model is representative of the real world. Neoclassical economists argue that perfect competition can be useful, and most of their analysis stems from its principles. Economists that are critical of the neoclassical reliance on perfect competition in their economic analysis believe that the assumptions built into the model are so unrealistic that the model cannot produce any meaningful insights. The second line of critic to perfect competition is the argument that it is not even a desirable theoretical outcome. These economists believe that the criteria and outcomes of perfect competition do not achieve a efficient equilibrium in the market and other market structures are better used as a benchmark within the economy.

Krugman (1994) points to the ways in which calls for greater national competition frequently mask intellectual confusion arguing that, in the context of countries, productivity is what matters and "the world's leading nations are not, to any important degree, in economic competition with each other." Krugman warns that thinking in terms of competition could lead to wasteful spending, protectionism, trade wars, and bad policy. As Krugman puts it in his crisp, aggressive style "So if you hear someone say something along the lines of 'America needs higher productivity so that it can compete in today's global economy', never mind who he is, or how plausible he sounds. He might as well be wearing a flashing neon sign that reads: 'I don't know what I'm talking about'." If the concept of national competition has any substantive meaning it must reside in the factors about a nation that facilitates productivity and alongside criticism of nebulous and erroneous conceptions of national competition systematic and rigorous attempts like Thompson's need to be elaborated.

* Competition law * Competition * Comparative advantage * Competitive advantage * Ease of doing business index * Global Competitiveness Report * Ireland's National Competitiveness Council * Paid exclusivity * Race to the bottom * Self-competition, Self-competition (Internal Competition) * World Competitiveness Yearbook (IMD Lausanne) *

# References

*

Competition in Utility Markets
from th
Body of Knowledge on Infrastructure Regulation
* WE
Global Competitiveness Report

World Competitiveness Yearbook
by International Institute for Management Development, IMD Lausanne * Ireland'
National Competitiveness Council
* Croatia'
National Competitiveness Council
* Sri Lanka'
The Competitiveness Program, Sri Lanka
* U.S
Council on Competitiveness
* Basque Country (Spain
Basque Institute of Competitiveness – Orkestra
* AccountAbilit
Responsible Competitiveness
* Spanish Competitiveness Counci

{{Authority control Competition (economics), Market structure Foreign direct investment Commercial policy