Ex 2. Fill in the gaps with the words and expressions from the text. 1. Competition occurs naturally between living organisms which with

1. Competition occurs naturally between living organisms which …… with ……

2. Competition can be remote, when players are …… from each other.

3. Seen as the …… of capitalism in that it may ……, encourage ……, or ……, competition is touched as the …… upon which capitalism is …….

4. The greater selection typically causes …… for the products.

5. The next form is …… or indirect competition, where products that are …… for one another complete.

6. The company was organized ……, with each brand ……, including a dedicated group of employees willing ……

7. ……, …… or other protectionist measures may also be instituted by government in order to …… or …… competition.

8. A …… monopoly or legal monopoly is …… by the state, often to provide an …… to invest in a risky venture.

Ex 3. Find in the text the English equivalents for the following:

конкурировать за признание и богатство; быть изолированными друг от друга; снижать цены и совершенствовать продукцию; сокращать уровень цен; близкий к уровню издержек; стимулировать эффективность; оправдывать что-либо; более обширный выбор; приводить к напрасно потраченным усилиям и увеличению издержек; быть близкими заместителями; деньги, имеющиеся у семьи в наличии; подразделения компании; правительственная монополия.

Ex 4. Match each term with the appropriate explanation.

competition, monopoly, oligopoly, internal competition, incentive, pure monopoly

1. Something that gives one a desire to work harder, or to do something that he hasn’t done before.

2. A market in which there are only a few sellers.

3. The situation in which one seller or a group of sellers acting together can control the market price.

4. The situation in a market in which there is only one seller of a commodity and he therefore faces no competition.

5. Rivalry within the company, e.g. between its branches or divisions.

6. Rivalry between business concerns in the same market, usually in selling at the lowest price or in giving better quality or generally offering better value for money.

Ex 5. Answer the questions and do the assignments.

1. What is implied on the notion “competition” generally?

2. What role does competition play in the market?

3. Expand on advantages of competition for firms and consumers.

4. Are there any disadvantages of competition for those involved?

5. How has economic competition been classified? Characterize each form.

6. Give examples of internal competition.

7. What are the cases when competition may be legally restricted or prohibited? How is the pure competition regulated?

8. What does the notion “monopoly” imply?

Ex 6. Find in the text the words and word combinations that refer to the following notions and comment on them.

1) direct competition

2) substitute or indirect competition

3) budget competition

4) internal competition

5) monopoly

Ex 7. Comment on the following statements:

- Competition is … an important force of the market.

- Competition is touted as the foundation upon which capitalism is justified.

- The psychological effects of competition may result in harm to those involved.

- Competition often is subject to legal restrictions.

Text B

Competition:

1.A form of market structure in which the number of firms supplying the market is used to indicate the type of market it is, e.g., perfect competition (many small competitors), oligopoly (a few large competitors).

2.A process whereby firms strive against each other to secure customers for their products, i.e., the active rivalry of firms for customers using price variations, product differentiation strategies, etc. From a wider public-interest angle, the nature and strength of competition has an important effect on market performance and hence is of particular relevance to the application of competition policy.

Perfect competitionis referred to as a model of industrial structure in which many small firms compete in the supply of a single product. Three primary features characterize a perfectly competitive industry:

- there is a multitude of firms (buyers as well as sellers) all too small to have any individual impact on market price. Therefore, marginal revenue and price are equal,

- all firms aim to maximize profit

- firms can costlessly enter and exit the industry. Also, it is assumed that the outputs traded are homogeneous.

Perfect competition is economically efficient in three ways:

(a) In the short run, this is efficient for the allocation of resources, because it ensures that no consumer will be deterred from buying something which he values more than it cost to make.

(b) In the long run, freer entry and exit ensures new entrants will be attracted into any industry where high profits are made.

(c) Again, in the long fun, perfect competition ensures minimum-cost production.

Although the features of perfect competition make it look a poor description of modern industry, it is a realistic description of world commodity markets where many traders deal in a homogeneous product. Moreover, its very powerful results indicate that the achievement of even a partially competitive market can be advantageous. Thus, the simple perfect competition model provides a good starting point for illuminating the forces underlying the real behaviour of firms.

Contestabilityis referred to as the degree of ease with which firms can enter or leave an industry. A perfectly contestable industry is one in which, as in free competition, there are no barriers to entry at all. Unlike perfect competition, however, perfect contestability implies nothing about how many firms currently exist in the industry - it is possible for an efficient monopolist to exist while no barrier to entry prevents other firms from competing. Contestability theory was stimulated by W. J. Baumol in the early 1980s. He showed that the attractive features of perfect competition could be achieved merely by the threat to incumbent firms that entry would occur should large profits be made.

The threat of entry should induce marginal-cost pricing and efficient production. In practice, entry barriers do exist, and because incumbent firms can often scare potential entrants away from entering, discipline that potential competition provides is considered less effective than that of actual competitors.

Vocabulary List

1. to indicate – указывать, определять

2. productdifferentiation – дифференциация продукции

3. applicationofcompetitionpolicy – применение конкурентной политики

4. tobedeterredfromdoingsmth – удерживаться от чего-либо, бояться

5. intheshortrun – в краткосрочной перспективе

6. inthelongrun – в долгосрочной перспективе

7. starting point – отправная точка

8. contestability – конкурентоспособность

Notes

1. to strive against each other – боротьсядругсдругом

2. to secure customers – зд. привлечьпокупателей

3. fromawiderpublic-interestangle – с точки зрения интересов общества

4. costlessly – без потерь, без издержек

5. underlying – лежащий в основе

6. incumbentfirms – зд. компании, уже занявшие места на рынке

7. …shouldlargeprofitsbemade – зд. если есть возможность получения высоких прибылей

8. homogeneous products – однородные продукты

9. marginal revenue – предельный доход

10. marginal-costpricing – ценообразование на основе предельных издержек

11. actual competitors – реальные конкуренты

Ex 1. Suggest the Russian equivalents:

active rivalry of firms for customers; price variations; product differentiation strategies; market performance; new entrants; minimum-cost production; entry barriers; an individual impact on market force; costlessly enter and exit the industry; the outputs traded.