What are the gains from competition?

Competition primarily refers to increased number of sellers in the market. As the number of sellers selling the same homogenous good or slightly differentiated goods increase, it increases the competition.

Competition gains are primarily reflected upon the consumers. It is the consumers who benefit out of increased competition.

To increase the sales, the firms undertake price cutting strategies, effectively meaning that the consumers will get the goods at the lowest of prices possible. They also need to undertake customer retention schemes like giving EMI options, free customer support, replacement policies, etc, again benefitting the consumers.

Due to cutthroat competition, sellers produce high quality products, thereby the consumers receive high standards products at good price rates. They also get variety in terms of many slightly differentiated products to choose from.

Hence, consumers gain out of increased competition.