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Competition is a situation of rivalry between firms, including individuals, selling goods or services in the same market. The aim of each firm is to maximize its profit. In the long run, this goal generally aims to gain as big a share of the market as possible at the expense of the other firms. Competition is thus a situation of strategic interaction analogous to a perpetual game, with winners and losers in any stipulated period. The market for cheeses, chocolates, mobile phones, video games, cars, and lawyers are all competitive.

The numbers of competitors may be large or small. The more numerous they are, the less influential are the strategic capacities of a competing firm and its effect on the market equilibrium. Perfect competition is a ...

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