Competition

Competition traditionally refers to the actions that firms take in a product market to outperform rivals in attracting customers and generating revenues. Yet, competition extends beyond product markets to other arenas such as factor markets, where firms compete for resources, and the political arena, where firms compete for legitimacy and favorable regulation. In addition, some firms meet the same rivals across multiple markets, which affect their competitive behavior in any particular market. Competition is thus best seen as a dynamic process in which firms can take actions in multiple competitive arenas simultaneously to gain temporary competitive advantages, which will dissipate as rivals respond.