The Importance Of Competition
Industries without much competition are marked by high prices, low customer service, and a lack of innovation. But when competition thrives in a market, consumers get better goods and services at lower prices. Existing producers in the market don’t like competition, but it’s good for consumers. Some businesses will succeed and others will fail. But as long as it is easy for new competitors to enter the market, prices will stay low and innovation will continue.
For decades, riding in a taxi stayed the same miserable experience: they were hard to find, expensive, and unpleasant…at best, all because competitors were prevented from entering the market.
But then Uber and Lyft came along and figured out a way to challenge the local taxi cab monopolies. And what happened?
Prices dropped, rides became easier to find, and quality went up…WAY up.
This is why Competition is fundamentally important.
Competition is the only force that consistently leads to lower prices and better quality goods and services, improving our daily lives.
If an industry is shielded from competition, then the companies within those industries can keep prices high, with little incentive to innovate.
But as soon as a new competitor joins the market and does something better, faster, or cheaper, then the other companies can either adapt and compete to stay relevant, or not. Either way is a win for consumers.
Some businesses will succeed, some will fail. But as long as the market remains open to new competition, then prices will stay low and innovation will continue.