Both the short-run and long-run benefits which are likely to result from competition
Competition between firms produces benefits for consumers both quickly and over time. In the short run, prices fall. In the long run, firms innovate and become more efficient.
Real World
When budget airlines Ryanair and easyJet entered UK routes previously served only by British Airways, short-run ticket prices fell sharply, and long-run investment in fuel-efficient aircraft accelerated across the industry.
Exam Focus
Explicitly label short-run and long-run benefits in your answer — examiners award separate marks for each time horizon.
Price Elasticity of Demand
PED = % change in quantity demanded ÷ % change in price
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