Question

What are the gains from competition?

Short answer

Improved quality, lower prices, higher wages

Step-by-step solution

Step 1. Introduction

Competition can be defined as the situation when different independent producers are striving against each other to attract consumers and gain more profits, or market share.

Step 2. Explanation 

Competition might be harmful to domestic producers but it pushes them to improve their quality. Lower import prices would also force domestic producers to charge a lower price to retain consumers. The inflow of trade would also help in product differentiation and provide more choices for consumers. Thus, the consumers in the domestic market would gain through lower prices and improved product quality, and a greater variety of products.

If businesses are benefited from international trade their profits would increase. Workers in such businesses would also experience higher wages.