Competition Policy and Economic Development: The Role of Competition in Fostering Economic Growth
When examining both the preamble of the Competition Act, 2002 and the logo of the Competition Commission of India (i.e. “fair competition for greater good”), it becomes abundantly clear that the law is designed to promote, sustain and ensure competition within the markets and protect it from any anti-competitive activity.
So, what exactly is competition, and how does maintaining competition in markets contribute to the economy? According to the Oxford Dictionary, competition is defined as a situation where individuals or organizations vie with each other for something not universally attainable; this principle forms the foundation of competition.
Competition is beneficial to the country’s economy
By competing with each other, companies become more competitive, innovative, and efficient, based on merit. This market dynamic makes the economy grow, creating jobs and well-being for society.
Affordable prices for everyone:
One simple way for a company to get more customers is by offering lower prices. In a market where many companies compete, prices usually go down. This isn’t just good for buyers – when more people can buy things, it motivates companies to make more stuff, helping the whole economy.
Improved quality:
Competition also pushes companies to make better products and services. They want to attract more customers and grow their business, so they focus on making things that last longer, work better, and offer better service.
More options to choose from:
In a competitive market, companies try to make their products different from others. This means you have more choices, so you can pick a product that gives you the right mix of good quality and affordable price.
Innovation:
To offer different and better products, companies have to be creative – in how they design, make, and provide services. Competition drives them to come up with new ideas and ways of doing things.
Job Creation:
Growing, competitive industries generate more economic activity, leading to increased job opportunities. As businesses expand to meet consumer demand, they hire more employees, contributing to lower unemployment rates.
Wealth Creation:
Competitive markets can lead to the creation of new wealth. Successful businesses contribute to increased tax revenues for governments, which can be used for public services and infrastructure development.
Boosting exports:
When companies compete with each other internally, it helps them become stronger and more capable of selling their products in other countries. It’s like practice for the international market.