COMPETITION AS EVOLUTIONARY PROCESS

Abstract

Economists regard market competition as the basis for the science of economics and most of them understand competition through equilibrium framework. However, some scholars criticize neoclassical approach by allegations that it is wrong to assume perfect competition as a driving force of the market; profit and loss are disequilibrium characteristics.

The market is viewed as one of the firm's main sources and constraints. Each rival seeks to maximise its market share by becoming the most productive, effective and the largest market leader, or by avoiding competition because of differentiation of products.

This paper suggests that innovation is not the only option for competition. The firm may choose to be simpler instead of being more advanced as well. Therefore, firms in more advanced markets that are at the frontier of innovation have no choice and must innovate to keep their positions there. Conversely, in less advanced markets firms are prone to look for easier ways.

DOI: http://dx.doi.org/10.5755/j01.em.17.4.2995