How to Keep Firms from Beating Each Other Up
The last of the Five Forces is the degree of rivalry among competitors. Vigorous price competition pushes the industry toward normal profits. Rivalry reflects not only the intensity of competition but also the basis for competition.
Factors Influencing the Intensity of Competition
The Number of Competitors in an Industry
Economists define perfect competition as an industry in which many buyers and sellers coexist in a market characterized by free entry and exit, and for which the product is undifferentiated. Because so many buyers and sellers comprise the marketplace, no single buyer or seller has any bargaining power. Consequently, the basic forces of supply and demand determine the market ...
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