Business Ethics and Corporate Governance, Second Edition

THE CONCEPT, LOGIC AND BENEFITS OF COMPETITION

Economists assert that given the resources and technology, an economy is efficient when it is able to provide its consumers with the most desired range of products at minimum cost and this is possible under the mechanism of a competitive market, leading to the determination of equilibrium price. In a particular product segment, marginal cost and marginal utility of a product are exactly balanced at the equilibrium price. Once the efficiency is achieved, it is not possible to reorganise production in order to make someone better off without making someone else worse in that particular situation. In the practical world, however, business decisions are affected more by actual rather than potential competition. ...