Market competition

Market Competition: Meaning, and the Types of Market Competition
Let us first divide “Market competition” in two different terms and first learn about each of them individually to understand market competition. A market can be defined as a place where two or more parties comes together to exchange goods or services or any other information.
Generally, a market is called a place where sellers sell their goods and service in exchange for money. The market can differ on the basis of products or services sold or on the basis of other factors like government regulation, taxes, legality of exchange, price ceiling, buyers target, etc. and the simplest meaning od word competition is when two or more parties try to gain competitive gain or win over one another.
In competition when one party wins then automatically another party loses. By understanding the terms market and competition, we can deduce that market competition is where two or more companies or organization strive to gain profit by competing with one another using various tactics.
Market competition exists in various form in the market. For example, in monopolistic competition market, there are many companies which sell products which are a close substitute but are not a perfect substitute.
In this type of market competition, companies try to gain a competitive edge over other competitive companies by providing a variety of products, good quality of products, and by making the use of advertising and other marketing strategies.
There are a total of four types of market competition, and each market competition has different features. In this article, you will learn about the different types of market competition along with the features of each market competition system.

Different types of market competition

There are a total of four types of market competition. Let us learn about them one by one.

#1. Monopoly

A monopoly exists in the market when there is only one seller in the market. The company controls a complete sector or industry. A monopoly exists in capitalism economies where there is no control of the government on the business transactions of businesses. In such scenarios, one company or a group of people takes control over the whole market.
The company has control over all the goods, supplies, infrastructure, commodities, and assets related to a particular service or product. Monopoly markets are highly undesirable market structure.
If a company has a monopoly in a particular market, then they can charge any price for the goods or services that they provide as no factor can restrain the high prices.
Monopolies have a competitive advantage over their competitors because either they are the only provider of the product or they control all market or the largest share of the market.
It is difficult to enter a monopoly market because of the high barrier to entry. A monopoly company can develop its control on the market because of the following two possible reasons.

1. 
   It has acquired the patent for the product or service.
   
2. 
   Government has permitted the company to provide particular services.
   

Monopoly market competition is highly undesirable as the monopoly company has the power to decide the price of the product. As there are no nearby competitors, there is no one to keep a check over the price decided by the company.
Because of this reason products sold by monopoly are usually sold at a higher price than their actual prices.
It is difficult for small competitors to survive in monopoly competition market. As being the oldest and strongest (financially) player in the market, the monopoly has good relation with the suppliers.
As a result of which they can buy raw material in bulk and can store it for a longer period. They usually buy a large volume of supplies at great discounts which are not possible for the small companies.

Because of this reason, monopolies have the power to start a price war to win back their customers. They have the power to lower prices of production to such an extent which is not possible for a small competitor to stay in the market.

The government makes policies in such a way so that no company can gain a monopoly and each competitor has its market share.