COMPETITIVE MARKET Meaning and
Definition
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A competitive market refers to a market structure in which there are many buyers and sellers who interact freely and independently, with each participant striving to gain an advantage over others. In such a market, there are no barriers to entry and exit, allowing firms to easily enter or leave the market. This absence of barriers ensures that new firms can enter the market and compete with established players, increasing competition and fostering a dynamic marketplace.
The key characteristic of a competitive market is a multitude of buyers and sellers, which ensures that no individual participant has the power to influence market prices or outcomes. Both buyers and sellers have perfect knowledge about the market, meaning they are aware of the prices and quality of products available. Consequently, firms in a competitive market are price takers, meaning they must accept the prevailing market price for their goods or services.
Competition in a competitive market is usually based on factors such as price, quality, branding, customer service, and innovation. Firms compete by offering differentiated products or by providing similar products at lower prices. This competition benefits consumers as it leads to lower prices, increased product variety, and improved quality.
Government regulation and antitrust policies play a crucial role in maintaining a competitive market. These measures aim to prevent anti-competitive practices, such as price fixing, collusion, or abuse of market dominance, which can hinder competition and harm consumers. Overall, a competitive market promotes efficiency, innovation, and economic growth by encouraging firms to continuously improve their offerings to attract customers in a fair and open marketplace.
Common Misspellings for COMPETITIVE MARKET
- xompetitive market
- vompetitive market
- fompetitive market
- dompetitive market
- cimpetitive market
- ckmpetitive market
- clmpetitive market
- cpmpetitive market
- c0mpetitive market
- c9mpetitive market
- conpetitive market
- cokpetitive market
- cojpetitive market
- comoetitive market
- comletitive market
- com-etitive market
- com0etitive market
- compwtitive market
- compstitive market
- compdtitive market
Etymology of COMPETITIVE MARKET
The term "competitive market" is composed of two words: "competitive" and "market".
"Competitive" comes from the Latin word "competere", which means "to strive together" or "to contend". It is derived from the combination of the prefix "com-" (meaning "together" or "with") and the verb "petere" (meaning "to seek" or "to aim for"). Over time, "competere" evolved into the Old French word "competitif", which later became "competitive" in English.
"Market" has an older origin and can be traced back to the Latin word "mercatus", which means "trading" or "buying and selling". The term "mercatus" originated from the verb "mercari", which means "to trade" or "to buy".
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