The concept of competition and the objectives of competitors

Enn Listra

Abstract


The conceptual paper is dealing with the different meanings of competition, systemizing the versions of competition arranging these in the same unifying framework, called in this paper the field of competition, and developed in this paper.

Competition and competitiveness are the terms frequently used both in business and public discussion about the economic units, their environment and about their ability to perform according to the strategic or policy goals derived from business, economic or social objectives. However, despite the fact that, as Krugman (1994, p. 30)[1] states, „… people who use the term „competitiveness“ do so without a second thought“, the meaning of the terms remain vague and to make things even more complicated, the exact meaning depends on the problem under hand.

Almost infinite variety of real world situations and array of possible problems have created a continuum of views inspiring Boone (2000)[2] to answer the question what is competition that „more than two hundred years after Adam Smith we still don’t know“ and Krugman (1996)[3] to claim that at least in the case of nations (international trade) the term competitiveness is meaningless on the one hand and still giving possibility to have detailed definition for general public in Mirriam-Webster [4] and a precise definition of competitive markets in economics (Mas-Colell, Whinston and Green, 1995, ch. 10) on the other hand.

Meanwhile, the articles in journals and presenters in the conferences put very different, sometimes partly at least seemingly contradicting to each other, meaning. Competitive situation and its outcome depends heavily on the actors in process of competition, on the constraints they have to face, and on the objectives they are following either by their own choice or by the external forces determining the choices of the actors. The analyst has to hypothesise different types of rationalities used by the actors in different configurations of the field of competition, depending on, among other things, whether one’s aim is to analyse the competition on the levels of firm, industry or market, cluster or location, country, or region.

The process of determining the objective, sometimes even the very existence of it, depends heavily on the features of the main actors. Mainly, the paper uses meta-analysis of earlier literature to achieve the aim. We agree with Porter[5] (2008, p. xi) that the “competition is pervasive” but show in the paper that more broader view should be taken in an attempt to build a unified concept of competition.


[1] Krugman, P. (1994). Competitiveness: a Dangerous Obsession. Foreign Affairs, Vol. 73, No. 2, pp.28 – 44.

[2] Boon, J. (2000). Competition. Working paper, No. 2000-104. Center for Economic Research, Tilburg University

[3] Krugman, P. (1996). Making sense of the competitveness debate. Oxford Review of the Economic Policy, Vol. 12, No. 3, pp. 17 – 25.

[4] Mirriam-Webster, http://www.merriam-webster.com/dictionary/competition.

[5] Porter. M. (2008). On competition. Harvard Business School


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