In markets where firms have to compete to persuade the consumer to buy their product, consumers benefit from a choice of products and prices.
Competition encourages firms to innovate and to reduce costs to keep ahead.
Supply and demand determines the price and output of a good or service rather than any one firm or group of firms. Competition benefits the economy by encouraging the efficient allocation of resources, entrepreneurship and a more flexible economy able to adapt to changing circumstances. This in turn bolsters productivity and nourishes investment, allowing national income to grow and the country to retain its comparative advantage in the global economy. The natural instinct of firms, however, is to increase their market share. From a dominant position, it will be able to influence prices.