economic theories of competition

Economic theories of competition focus on how businesses interact within a market to influence prices, products, and consumer choices. Key models include perfect competition, where many firms sell identical products, leading to lower prices; monopolistic competition, where many firms sell differentiated products; and oligopoly, where a few firms dominate the market. Competition drives innovation, efficiency, and better services or products. It can benefit consumers through lower prices and more choices, but excessive competition may also lead to harmful practices or market failures. Understanding these theories helps in comprehending how markets operate and the role of businesses within them.