The structural approach of market competition

Abstract

Competition assessment in the economics is based on the theory of market structure. There are two perceptions of industrial competition—dynamical and statical. A statical picture shows—a long-term balance of industrial competition which will exist if the industry would be described as a market entity in perfect competition, having the constant technology. Distorted competition arises from theadvantages of various processes, economies of capacity, lower prices, which support greater market power of one against its competitors. Robust approach states—that the market is often imperfect. Distorted competition arises from modern innovation, product derivations, technological advances in production processes. In addition, monopoly situation is volatile because of creative destruction. Whereas factors connected with technological progress and firm innovation are difficult to detect froma dynamic point of view.