Imagine a person selling product X, the cost of which is $100. You, a consumer, want that product, and would be willing to pay as much as $200 for it. You and the seller meet.

If there are many such sellers, you the buyer have a bargaining advantage in that you can threaten to buy from another seller. Assuming that other sellers are nearby and their products are comparable, you are likely to buy at a relatively low price. The more sellers there are, the more likely you are to pay a price fairly near to cost. Competitive suppliers must compete for sales, and that tends to keep their prices down. From the consumer’s

point of view, that is most advantageous-and on average the sellers will get a reasonable return for their services.