How Does Different Competitions Disturb Market Equilibrium

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The market competition of a country may determine its trend in market equilibrium levels. Since market forces are the main contributors to the variation in price levels, it can be seen that the type of competition will have a major impact on determining market equilibrium. Through price mechanism, the interaction between supply and demand constitutes a point of equilibrium between price and quantity. Pure competition and monopoly, are competitions that unsettle this point of equilibrium though commanding forces within a market. In monopoly, there are price setters who can disrupt the equilibrium of the market. Taking into account of market competition, a firm can alter the market equilibrium in their favour by exploiting their advantages .Firms exists as single sellers of a certain product, abandoning the economic principle and disabling any possible competition. With high barriers to entry due to an economies of scale, the market in power can easily contest with any new firms in the market. By exploiting an economies of scale, they can have cost advantages over other new entrants. For instance, limiting price levels can force new suppliers within the market to function at a loss, thus, allowing the existing market to prevent any potential competition. Becoming an independent supplier means having absolute control over the market. Hence, the price level can be altered in their favour as consumers will have no choice but to 'take' or accept the price as there is only one producer within the given industry. Furthermore, the market equilibrium could be deliberately increased as consumers must accept higher prices. This broken interaction between supply and demand creates restriction of consumer choice, ultimately preventing an adequate level of market equilibrium. In a pure competition or 'perfect' competition, suppliers must accept any prices that consumers are

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