How does competition make the consumer better off?

This is economics 101.

Competition ensures that the consumer can usually get a good price on an item.

If you have only one company (Company "A") that makes "widgets", then that company can charge whatever they want for their "widgets" because they are the only game in town (ie a "monopoly").

Now, you get another company (Company "B") or store in town that sells the same widgets. It sells widgets for about HALF of what the first company sells their widgets for. So Company B starts siphoning off customers from Company A.

Company starts losing customers and money. So they are forced to cut their prices to the same as "B" or just a bit lower.

Now depending on what the profit margin is, Company A and Company B will probably match prices, etc. If B can sell for half of what A is selling widgets for, that means that there is either a BIG profit margin, or company A's costs are high.

This is sort of what the airlines and Wal Mart do. Well it is EXACTLY what they do.

So in order to compete, a company MUST minimize costs while keeping productio or sales up.

So now we have A and B battling for customers in your town, when COMPANY "C" comes along and says, I can SELL the same widgets for 1/3 of what A nd B can, so now C gets all the customers!

The price is LOW and customers BENEFIT! But wait, there IS a downside:

Now, let's say that A really had high costs...labor, etc and they could not compete, and they went belly up (bankrupt). Many people lose their jobs or take lower paying service jobs (like Wal Mart)...

Now B, looking for real ways to cut costs, decides to CLOSE it's widget factory in Kansas City, and put lots of higher paid workers out of work.

They find that they can get their widgets made for about 1/10 the cost in CHINA! So they go to China and have some Chinese factory make them.

So now, Company C, who had been cutting costs and was winning customers, is still making widgets here in, say, Dallas. However, their sales, which were once strong, are now slipping because Company B moved basically stopped MAKING them and only 'resells' them in the U.S.

So NOW company C, in an effort NOT to end up like Company A, has to do the same thing to compete with Company B...that is, get THEIR widges made in China as well! Maybe right next door to the factory that make's widgets for Company B!

So NOW out of the three widget companies, ONE is bankrupt and two have moved to buying widgets made in China and selling them here.

And American workers were laid off.

This is how it happens!

If you want to sell your 'widget' in Wal Mart, well, it is no longer YOU who tell Wal Mart what to sell it for...Wal Mart tells you! Yes...if you want to sell your widgets in a Wal Mart and take advantage of the fact that Wal Mart is the largest retailer in the world, you have to agree to what Wal Mart says they will sell it for. It doesn't matter if you are making your widgets in the U.S.A...if you can't make it cheap enough to sell it at Wal Mart's price and make a profit, you just get it made in CHINA.

So that's why 1) gasoline is so high and 2) building materials are so high. China is now the world's FACTORY and their economy is smokin' red hot and they are buying and consuming MORE oil than we are. And they compete for it same as us and they buy it. Same for concrete and lumber.

So those real 'cheap' prices at Wal Mart are insidious. We are sending BILLIONS and BILLIONS of dolllars to China, and the Communist Chinese Government is using the profits from those same factories that make the widgets we buy to modernize their armed forces (esp, Navy), while we contine to low-price our country into oblivion! Look at everything in your house...MADE IN CHINA!

I guess I've said enough.