1. How doescompetition relate to communism, socialism, fascism, capitalism andmonarchy?
Under communism,the government or the community owns all the means of production.This means that the government is the only player in allindustries/markets. Consequently, the government has full control ofthe market, which is against the traditional economic sense thatrequires that competition takes place only where all players,suppliers, and buyers, have no influence on anything such as priceand market entry, etc (Sage & Rouse).
Socialism isconsidered to be a moderate form of communism. It encourages thegrouping together of producers or forcing them to cooperate so as todiscourage competition. Ideally, socialism aspires to replaceindividual competition with collectivism and limits individual’sfreedom of choice on whether to compete or cooperate.
Fascism issimilar to socialism but leans towards capitalism. This means thatfree competition is not allowed under fascism. Instead, thegovernment indirectly controls competition through a small number ofplayers allowed in the market.
Capitalism isfounded on free competition and basic human freedoms. This means thatwithout free competition, capitalism cannot exist. However, perfectcompetition assumes perfect information which is impossible to attain(Kasper 2008). Human freedoms are necessary in that they allow freemovement of goods and services as well as access to information.Players capitalize on imperfect information
As economicsystems, monarchs provide support for competition through betterstability, efficiency, and social capital in the form of trust.Therefore, monarchs create a new platform of competition in terms ofassociation with royalty (Ansink, 2013).
2. To what extentdoes capitalism include ‘crony capitalism’ and why?
Crony capitalismexists where some business entities get unfair advantage out of theirclose association with the government and those in government. Undercapitalist markets, crony capitalism is rampant. It leads loss ofpublic utility, inefficiencies, unfair competition, unequal resourcedistribution and corruption (Mankiw 2014).
3. What roles areplayed by:
a. Competition. Increases efficiency, increases utility tobuyers, drives innovation, creates employment and drives economicgrowth. Competition is actually what makes capitalism tick andcapitalist nations in the world are the most successful developmentand economic-wise. Thus, competition also drives up social welfare(Kasper 2008). b. Prices. Price signals the amount ofresources that needs to a particular cause such as the production ofan item or the consumption of the same. It also signals thepreferences of buyers by their willingness to increase of lower theirprice offers (Kasper 2008). According to Adam Smith, price is part ofthe invisible hand that drives demand and supply in the market(Kasper 2008 Mankiw 2014). In other ways, prices are indicators ofinflation and economic conditions through price movement.
4. Is competitionconfined only to prices, or does it extend beyond prices?
No, competitionis not limited to price. It can be based on other aspects such asinnovation, marketing, advertising, branding, packaging, talent/labormarket, research, market reach, quality, market share etc. Thus,price alone is not enough to indicate the state of competition in agiven market (Mankiw 2014).
5. Do competitorsrelish competition, or do they try to avoid competition? If they tryto avoid competition, how do they attempt to do so?
Competitorsrelish competition up to a certain level. In the initial stages,firms enjoy competition as it forces them to innovate and increaseefficiency. On the other hand, competition lowers market share,lowers profit margins, and increases costs (Mankiw 2014). Therefore,firms are always fighting competition despite them benefiting fromcompetition to some degree. They employ many measures such asacquisitions, establishing market entry barriers, forming cartelsamong others.
6. Is it the samething, or is it different, to be pro-competition versuspro-competitor in some cases but not in other cases? Why?
Pro-competitionis different from pro-competitor. Pro-competition is the creation ofsuitable market environments that encourage competition and the entryof many players. This is most done through enacting of laws thatsupport competition (Mankiw 2014). Pro-competitor on the other handis the creation of market environments that tend to favor particularplayers or group of players. For instance, affirmative actions inbusiness may tend to favor businesses owned by marginalized groupshence are pro-competitors. Therefore, it is different to bepro-competition and to be competitor all the times.
Ansink, J.(2013). The business case for monarchies. Retrieved from
Kasper, W.(2008). Competition. The Concise Encyclopedia of Economics.Retrieved from
Mankiw, G.(2014). Principles of economics. New York: Cengage Learning:
Sage, A. &Rouse, W. (2011). Economic systems analysis and assessment:intensive systems,
organizations.New York: John Wiley & Sons.