In microeconomics, competition is influenced by five factors: product features, the number of sellers, barriers to entry, information availability, and location. Each factor hinges on the availability or attractiveness of substitutes, and most♋ markets lie somewhere between perfect competit꧑ion and monopoly.

1. Product Features

Product features describe its level of differentiation. If a company's product is similar to others already on the market, the good or service is indistinguishable from products sold by competitors. This situation would imply heavy competition. Alternatively, a product might be completely differentiated or unique with low levels of competition.

2. Number of Sellers

The number of sellers impacts competition. If there are many sellers of an undifferentiated product, competition is considered high. If there are few sellers, competition is low. If there is a single seller, the market is regarded as a monopoly.

3. Barriers to Entry

澳洲幸运5开奖号码历史查询:Barriers to entry can influence the number of sellers. Market characteristics such as high capital investment requirements or heavy regulation may prevent new companies from entering the market, which in turn provides a level of protection to existing firms. With♋ lower competition through barriers to entry, firms will be able to charge higher prices.

4. Information Availability

Information availability revolves chiefly around 澳洲幸运5开奖号码历史查询:price discovery. When customers🐈 can efficiently and accurately define prices across competitors, companies are unable to set prices, and competition is🧸 robust.

5. Location

A proactive location strategy can corner potential customers and reach them more effectively than the competition. For example, 🔯gas stations ar🌸e often strategically located on busy corners.

Levels of Competition

Most markets are somewhere in between 澳洲幸运5开奖号码历史查询:perfect competition and monopoly. In perfect competition, each firm's marginal profit equals 澳洲幸运5开奖号码历史查询:marginal cost. There is no economic pr🌱ofit. In a monopoly, the marginal profit equals marginal revenue, which is the incremental revenue generated from selling one more unit.

Companies in perfect competition are considered price takers, meaning that they have no scope to set prices, the reason why 澳洲幸运5开奖号码历史查询:marginal profit is equal to marginal cost. Perfꦐectly competitive markets are defined by a homogeneous product, ma🌳ny sellers with low market share, and no barriers to entry or exit. These firms cannot differentiate their products, and their customers have highly accurate information.

The Bottom Line

Most markets engage somewhere between true competition and monopoly. Microeconomic factors that affect competition include a product's features and the number of sellers. In the U.S., the Federal Trade Commission works to eliminate anticompetitive business practices.