5-3 Market Structure and Competition


  • Although some people argue that any barrier to competition will inevitably lead to inefficiency, a counter-argument is that erecting barriers- for example, by process innovation, product differentiation, persuasive advertising, or pricing- in order to be successful and make competitor less successful, is a normal part of rivalry and competition.

  • According to this view, market concentration arises naturally from a few successful firms growing larger as a result of increased efficiency, innovation, and economies of scale in production, distribution, R & D, capital financing and so on.

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