The most important benefit of a competitive environment is the creation of incentive for change. Since firms are in competition to sell their products or services, they must continuously keep a competitive advantage over the market. In order to do this they must constantly react to meet the improvements made by other companies in their products and services. For instance, Nintendo when it first started was very profitable for a while selling its game player, but when Sony came out with a 32-bit player which intern took allot of the business away from Nintendo. So as a reac

tion of Sony's new player, Nintendo created a 64-bit version, that was even better in all aspects of Sony's play station. It is a continuous cycle to make companies products better than the other. Without competition what incentive would there be? Atari might still be the number one game player, because there is no one else to come up with a better idea in that product line. Competition forces people to learn more and be more creative with there knowledge. Most of the technology that we have created in the last century has been form companies trying to out do each others product line.

Another very important aspect of a competitive market is the affect on price. Prices are lowered in this environment. A firm has to be competitive with the prices of other close substitutes. If a Coke was two dollars for one can while Pepsi sold theirs for fifty cents, then Coke would loose most of there customers. People would simply buy Pepsi, since it is a close substitute and less expensive. This would result in a price that meets the demand cu

Some common words found in the essay are:
Competition Bust, Soviet Union, product line, competition economy, demand curve, products services, competition forces, economy competition, production costs, competition competition, game player, competitive environment,
Approximate Word count = 707
Approximate Pages = 3 (250 words per page double spaced)