Models of Competition

Abstract

Theories of economic inequality frequently concern individual characteristics as the prime determinant of economic distribution. This chapter therefore accentuates partly overlooked but important structural feature of the market mechanism, namely competition among economic agents. It is the ruling principle of allocation of resources which keeps the dynamics of the whole market system. As will be explained in more details, the dynamics of the market system based on competition subsequently results in growth stimulating tendencies. The chapter therefore considers selected competition theories in order to depict important perspectives on competing agents in the context of the main driving forces of economic growth in modern economies. At the end, the task is to connect competitive structures and economic distribution. Understandably, we include just a small fraction of theories accentuating competition. On the other hand, presented models unveil the founding pillars of competitive processes which influence economic distribution at the end. Hence, we automatically abstract from various particular aspects that are usually present in extended versions of growth and competition models. By following this strategy, again, we elevate these models on a higher level of abstractness which eliminates various possible sorts of selectivity. A higher perspective also allows to formulate models for different types of agents, from individuals and households to firms and national states.