Non-price competition

Definition

Non-price competition refers to a situation where buyers compete with each other to acquire a good on a basis other than price. Such competition occurs in a situation of excess demand: at the given price, the demand for the good exceeds the supply. The typical cause for excess demand is a price ceiling, though it may also be caused by sticky prices or unforeseen dramatic changes in supply or demand.

Non-price competition is a form of rent seeking.

A typical form of non-price competition is queueing -- long waiting lines to buy the commodity.

Examples

Public services

Public services, many of which are offered for free, or at the same low cost, may suffer from non-price competition. There may be long queues (waiting lines) for access to public services. Here, people are paying for the free service by spending their time in line.

Limited quantity, low price

For commodities for which there is a market shortage, people may compete with each other to get to the few places selling the commodity. Thus, people may start waiting outside the shop selling the commodity hours before it opens, or pay others to purchase the good for them, or travel long distances looking for shops that still have the commodity.

Impact of non-price competition

Further information: Non-price competition is inefficient

Non-price competition is considered a form of rent seeking and is in general considered inefficient.