In economics, competition is the rivalry among sellers trying to achieve such goals as increasing

profits, market share, and sales volume by varying the elements of the marketing mix: price, product,
distribution, and promotion. Merriam-Webster defines competition in business as "the effort of two or
more parties acting independently to secure the business of a third party by offering the most
favorable terms."[1] It was described by Adam Smith in The Wealth of Nations (1776) and later
economists as allocating productive resources to their most highly-valued uses[2] and
encouraging efficiency. Smith and other classical economists before Cournot were referring to price
and non-price rivalry among producers to sell their goods on best terms by bidding of buyers, not
necessarily to a large number of sellers nor to a market in final equilibrium.[3]
Later microeconomic theory distinguished between perfect competition and imperfect competition,
concluding that no system of resource allocation is more Pareto efficient than perfect competition.
[citation needed]

Competition, according to the theory, causes commercial firms to develop new products,

services and technologies, which would give consumers greater selection and better products. The
greater selection typically causes lower prices for the products, compared to what the price would be
if there was no competition (monopoly) or little competition (oligopoly).
Competition is generally accepted as a necessary condition for the coordination of disparate
individuals interests via the market process.[4]
It is generally accepted that competition results in lower prices and a greater number of goods
delivered to more people. Less competition is perceived to result in higher prices with a fewer
number ofand less innovation ingoods delivered to fewer people.

http://en.wikipedia.org/wiki/Competition_(economics)