Free competition, the free market or the free market refers to the situation in which people and companies They have the total freedom to carry out any type of economic activity (as long as certain limits are respected). By economic activity we understand all those that have to do as sellers (or suppliers) or buyers (or demanders).
Companies have the freedom to enter and exit the market whenever they want, set the prices of the products and / or services they sell. Free competition is not only the responsibility of the companies offering products and services, but also of the consumers, who have the total freedom to choose the good or service that best meets their need. Thus, a certain buyer will be able to satisfy their need in the best possible way by going to the different offers on the market.
Requirements for free competition
In order for there to be free competition between the intervening agents, certain initial conditions or requirements must exist:
- That agents have the freedom to offer and demand the goods and services they want.
- That they can exercise their freedoms while respecting the rights of other economic agents (whether they are buyers or sellers).
- That there is a fully transparent legal framework capable of allowing agents to exercise their rights.
- That the State intervene with the purpose of: punishing agents who violate the Competition Law of the territory (as well as a regulatory body that supports it); regulate and supervise the regulations that are in force regarding the protection of free competition; and to be able to offer sufficient mechanisms or means for the protection of consumer rights.