Extent of Competition in Market Affecting Price Determination
A competitive market is one in which huge numbers of producers struggle with each other to gratify the wants and needs of a great number of customers. There are some market structures in which firms can control. The type of construction influences the firm’s behavior, whether it is proficient, and the stage of earnings it can create. Between the lower limit and the upper limit where would the price settle down? This is precious by the nature and the degree of competition. The price will tend to reach the upper limit in case there is a smaller degree of competition while under situations of free competition, the price will tend to be set at the lowest level.
In a competitive market no particular producer, or assembly of producers, and no particular consumer, or assembly of consumers, can dictate how the market operates. Nor can they independently decide the price of goods and services, and how much will be exchanged. Competitors’ prices and their predictable reactions must be considered before fixing the price of a product. Not only the price but the quality and the features of the competitive products must be examined carefully, before fixing the price.