FionaK |
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| I have been having another think about competition. What struck me first is that a quick dig about does not really produce a list of the claimed benefits of competition: it seems to be accepted without question that they are there. So to think about it you have to really second guess the argument: I find that really difficult to do. But here goes.
1. Competition leads to innovation as companies try to make a better product (or the same product cheaper) so that people will buy theirs, and not their competitors.
Well that seems to be the theory. Is it true? As outlined above I do not think there is much evidence for that. At least in established markets it seems that companies do not innovate in any meaningful sense. They do produce gimmicks. So now I can have soap powder or tablets or gels or whatever. But they are all designed to make clothes clean using a washing machine. I see absolutely no benefit of using one form rather than another. I do not think people were unhappy when there was only one form: and if gel was better at getting clothes clean then in theory all the other forms should lose market share and disappear: but they don't.
What is true is that powder allows me to use less than tablets or gel. I think that is what "innovation" is all about. It increases profit by making me use more of the product: not by making the product better.
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