The Importance of Competition - 4 |
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Because firms compete amongst themselves, there is a continual search for the
least cost, greatest profit method of production. If resources can move freely in
markets, then raw materials and labour can move from one firm to another. Each firm
is constantly looking for ways to improve the productivity of its capital, as well.
In a market economy, the development of new technology is constantly being encouraged.
This increases the rate of investment, and helps promote economic growth and employment.
Competition ensures consumers have a variety of goods and services to choose from. New
products will regularly be introduced, further adding to choice, and a
better standard of living. Competition can also help foster lower prices.
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