Competition and growth: the role of a competition agency

Competition is a crucial factor in driving economic growth. First, it places pressure on firms to increase their efficiency. Second, it ensures that more productive firms increase their market share at the expense of the less productive. These lower productivity firms may then exit the market, to be replaced by higher productivity firms. Third, in the presence of competition, firms will aim to innovate to gain a cost advantage, to differentiate their products, or to bring new products to the market place.