Abstract

 
 
 Competitive product markets are characterized by aiming at complete consumers’ needs satisfaction, flexible market price making, freedom of economic activity and entrepreneurship, free entry and exit from a market, fair trading and business practices etc. The highest values for the companies functioning at the competitive markets are consumers and consumer needs. Accordingly, all the decisions related to the companies’ activity are being taken not based on the entrepreneurs’ ambitions, but from the perspective of the consumer as the agent of future income and profits. One of the essential characteristics of the markets competitive development is ability of the market players to optimize costs, minimize prices, and improve product quality for the maximum consumer satisfaction. Innovations are one of the means for providing competitive development path. However, the essence of innovations is not only introducing something new, some quality changes of the entrepreneurship activity. This economic category may manifest itself as a barrier for entry into product markets, and may cause emerging of innovative monopolies that eventually influence competitive development. Presented article is dedicated to the outcomes of innovative activity on the marketplace. Interconnections between the competitive environment and innovativeness are being investigated, and as the result, innovativeness is proven a method of overcoming competitive pressure, achieving competitive advantages at the market. It is determined that innovativeness depends on the companies’ size, as the financial capacity for innovations and availability of the labour potential concentrated in the innovative area are higher within big companies. As well the need for innovativeness as the mean for attaining competitive advantages depends both on the industry type and the product market characteristics, where a company is functioning, as there are no needs for competitive advantages at monopolistic markets. Innovations may also appear in natural monopolies as the result of introducing some regulatory policies. Also the causality between companies’ pursuance of uniqueness, the level of national competitiveness – and the innovations is being investigated, as well as the time lag between introduction of innovations and gaining some competitive advantages at the market. Understanding mutual influences of innovations and product markets competitive development is the clue for taking proper decisions by regulatory bodies with respect to markets development. Appearance of innovative monopolies aggravate the demand for regulatory bodies control over product markets development with the purpose of preventing excessive use of the market power by innovative monopolies.
 
 
Highlights
Product markets within any economic system emerge and form under the influence of the market players – namely their actions in the framework of competition for customers and profits
For avoiding fierce competition in case of high market saturation, some companies initiate innovative activity in order to gain an edge in the competition for global tradeIn such cases, innovations become the instrument for competitive development
If we compare J.Schumpeter’s theory of competition (J.Schumpeter, 1995) with definition of innovation, we see that these two economic concepts are similar and are developing simultaneously - the task of competition may not be fulfilled without innovative approach
Summary
Product markets within any economic system emerge and form under the influence of the market players – namely their actions in the framework of competition for customers and profits. Competitive mechanism is a complex process with the extent and type of competition changing over time as firms enter and leave the market, as new products and processes are introduced, and as firms employ different competitive strategies. Ability of a certain company to interact actively at the market depends both on internal and external factors. External factors encounter first of all consumer tastes, market saturation, number of market players etc. Changes in consumer tastes compel the companies to reorient, master new production technologies, in some particular cases – differentiate the types of activity, suggested products and services. For avoiding fierce competition in case of high market saturation, some companies initiate innovative activity in order to gain an edge in the competition for global tradeIn such cases, innovations become the instrument for competitive development
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