Competition is an essential conditionnormal functioning of any market economy. The market is necessary to ensure the most efficient use of limited resources, the best coordination of the plans of buyers and sellers, the distribution of revenues according to the achieved results. All this can be achieved only in conditions of competition between producers. As practice shows, it is competition and the market that are the mechanisms for the development of the economic system.
The term "competition" is a multifaceted concept,which can not be covered by one universal definition. Competition - competition, rivalry between producers, acting in the market for the most profitable opportunities for production and marketing of products and obtaining the maximum possible profit.
Theory of competition
Theory of competition and the role of competition inregulation of market relations originated within the framework of classical political economy several hundred years ago. Adam Smith first began to talk about the key role that competition has for automatic price regulation in the free market. Smith said that competition is an "invisible hand" that forces sellers to set prices in accordance with the demand for this product from buyers. Thus, a highly competitive market is able to independently form the price of equilibrium.
In the future, the notion of this conceptsignificantly expanded and deepened. As a result, different types and types of competition were distinguished, differing among themselves, first of all, on the level of concentration in the market of competing sellers of homogeneous products. There was a division of the concept of "competition" into its two types: "perfect" and "imperfect". Characteristically, Ricardo, Smith, and other early researchers have increasingly considered perfect competition, and imperfect competition has been studied in detail in later works.
Signs of perfect competition:
· At the same time, many small companies operate on the market.
· Homogeneous products are produced in the market.
· There are no entry and exit barriers in the industry.
· Equal access to various types of information.
· The horizontal demand curve for all competitors.
· None of the firms is able to exert a significant influence on the market price.
Functions of competition:
1. Creation of a mechanism for selecting effective solutions.
2. Incentive function.
3. Differentiation or stratification of the goods of producers.
Thus, competition is really the engine of social progress.
Competition in the Russian economy
In our country, the competitive environment is more activeis formed in large cities and affects in particular such areas of activity as the sale of personal computers, catering, publishing, retail, transportation services and so on.
Analysis of the problem of formation of a competitive environment in Russia allows us to identify the three main components of competition:
· Competition in the domestic market between local commodity producers.
· Competition in the domestic market between foreign and domestic producers.
· Competition in foreign markets between foreign and domestic producers.
In conditions of a rather sharp opening of the marketsRussia for foreign firms a significant proportion of domestic enterprises of key industries was in the domestic market uncompetitive. As a result, the main task was the survival of the best domestic producers in the face of open fierce competition with foreign companies.