non-price competition

Definition:
The essential difference between price and non-price competition is that the former implies that the firm accepts its demand curve as given and manipulates its price to try and attain its objectives, while in non-price competition it seeks to change the location and shape of its demand curve. The importance of non-price variables in influencing demand was first recognized in the early 1930s when Joan Robinson and Edwin Chamberlin independently (but almost simultaneously) published their theories of imperfect competition. Chamberlin's theory introduced the notion of product differentiation into the explanation of competitive behaviour when he argued that a general class of product is differentiated if any significant basis exists distinguishing the goods or services of one seller from those of another. Such a basis may be real or fancied, so long as it is of any importance to buyers, and leads to a preference for one variety of product over another. Where such differentiation exists, even though it be slight, buyers will be paired with sellers not by chance, as in perfect competition, but according to their preferences. The emergence of marketing in the post World War 11 era is largely a reflection of suppliers efforts to avoid the consequences of price competition by choosing to compete on factors other than price.

Cross-References:
[product differentiation] [demand, law of] [monopolistic competition] [competition]

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