An incentive is an inducement to take a particular action. It can take the form of a carrot or a stick. If, for example, smoking is consider bad, an increase in taxes to increase the price of cigarettes or tobacco in general will act as an incentive to stop smoking. Similarly, if higher education is considered a social good, then reducing tuition costs acts as an incentive to take tertiary or post-secondary education. Scarcity leads to competition.
Competition is reflected in economics by 'willingness to pay'.
If someone needs a good or service more than another person, they are generally willing to pay more for it. This will tend to raise the price for all consumers. On the other hand, if one person needs a job more than another, they will be willing to accept a lower wage. The effects of economic events work their way through time. The immediate effects are the substitutions made in response to changing incentives.