Competition can be said to be a sequence of events in which companies, organizations or firms(small and big alike) that produce similar goods and or services try to outsmart, outwit each other to ultimately come out on top of the bunch.
A healthy competition in a free market is essential to a growing functioning economy and without a healthy competition, there is bound to be a monopoly in the production of goods and rendering of services.
These are some characteristics of competition;
1. A healthy competition should always be neutral and un-biased.
2. Competition is constant and ceaseless as it goes on all the time. We all indulge in competition whether knowingly or unknowingly
3. Competition is universal, common and all embracing as it goes on all over the world.
In my view, there are more advantages than disadvantages with competition in a free market.
Here are some pros;
1. It definitely fuels innovation, growth and progress
2. It brings about creativity and also increases productivity
3. A healthy competition definitely favors the consumers as it helps lower prices and increases the quality of goods
4. It fuels innovation which in turns brings about varieties and new ideas
5. It brings about decent pricing in the production of goods
As with pros, there are also cons.
1. As a small and growing business, you’re bound to lose business to bigger and stronger firms when there’s a strong competition
2. Competition pose a threat to a small business as they could pack up and close up shop
3. A competition could very well turn into a conflict especially if it’s an unfair competition with undue advantage to one side.
Generally, competition is very essential in a free market and without competition, there would be monopoly in the production of goods and rendering of services. And when there’s a monopoly, small business and start ups are destined to fail.
What you said is fairly true and also common sense as we've seen from decades of reasonably free market activity. However it does have a few caveats - it only works if there is a strong government in place which is able to defy lobbyist type activity, which in the most ruthless free markets will have corporations trying to create rules that purely benefit themselves. Corporations exist for decades and centuries, politicians are lucky if they can hold power for a few years, so there is a slight disadvantage in that respect - they have longer timescales to plan "attacks". Another is that it's possible, at least in some countries, that things like water or power generation could potentially be better managed by the government because there is such a monopolistic trait inherent to their operation.