Substitution competition
The substitution competition is a form of competition .
In a narrower sense, competition for substitution means that products or services compete with one another that are manufactured in different branches of the economy and with different production processes, provided that these meet the same customer needs. These products are mutually substitutable . So meat and vegetables are equally filling. In terms of calorie intake, they can be substituted for each other. This is particularly important in production processes. Thus, under market conditions , the price of crude oil will never rise above the price of coal plus the cost of coal liquefaction .
In a broader sense, substitution competition also takes place via the budget restriction . Since the consumer can only spend his income once, the expenditure for product A competes with that for product B.
Substitution competition can be avoided by artificially linking the prices of different goods markets to one another, as is the case, for example, with the oil price link for natural gas.