Syllabus: Pearson - GCSE Economics
Module: 1.2 Business Economics
Lesson: Pearson - 1.2.4 Business Competition
Jump to Section:
Introduction
1.2.4 Business Competition is a core topic within Paper 1: Microeconomics and Business Economics in the Pearson Edexcel International GCSE in Economics. The unit explores how competition influences pricing, efficiency, innovation and customer choice, and prepares students to evaluate the structure and behaviour of different types of businesses.
This topic connects strongly to real-world decision-making and helps students understand how businesses operate within a competitive environment. It’s also a stepping stone into understanding wider economic policy and market outcomes, making it both practically and academically valuable.
Key Concepts
The Pearson Edexcel specification outlines that students should be able to:
Define competition and explain why firms compete (e.g. to attract customers, increase market share, grow profits).
Identify the benefits of competition to consumers (e.g. lower prices, better quality, more choice) and to the economy (e.g. efficiency, innovation).
Understand how competition affects pricing and output, including differences between market types (perfect competition, monopoly, oligopoly).
Explain how businesses respond to competition, including product differentiation, advertising, pricing strategies, and improved customer service.
Distinguish between types of market structure, particularly monopolistic and competitive markets.
This content is foundational to understanding how businesses interact within markets and respond to both consumer behaviour and rival firms.
Real-World Relevance
The principles in this topic are visible across every industry. Consider:
Supermarkets (e.g. Tesco vs Aldi): Competing on price, location, own-brand ranges, and loyalty schemes.
Streaming Services (e.g. Netflix vs Disney+): Competing through exclusive content, pricing tiers, and user experience.
Ride-sharing apps (e.g. Uber vs Bolt): Competing via promotions, driver incentives, and app features.
These examples help students connect abstract concepts to everyday decisions, enabling them to apply economic thinking beyond the classroom.
How It’s Assessed
This topic may appear across all four compulsory questions in Paper 1, particularly through:
Short-answer questions (e.g. “State one reason why businesses compete.”)
Data-response questions using case studies that ask students to analyse a business’s competitive environment.
Extended response questions that may require evaluation (e.g. “Evaluate the impact of competition on consumers and producers in a chosen market.”)
Students are expected to use clear chains of reasoning and apply key terminology. Diagrams aren’t always required here but can support explanations when discussing market outcomes.
Command words to be aware of include: Explain, Analyse, Evaluate, and Discuss — each requiring increasingly deeper levels of understanding and argumentation.
Enterprise Skills Integration
Competition isn’t just theory — it’s where business comes alive. This topic naturally develops:
Decision-making – Students evaluate how firms choose between pricing strategies or customer loyalty investments.
Problem-solving – Analysing how a firm might respond to a rival’s move, like a price drop or new product.
Strategic thinking – Understanding how different structures influence long-term business behaviour.
Enterprise Skills Simulations are built to reinforce this. Students experience running a fictional business, making decisions on pricing, marketing, and product development while competing against others — giving them a risk-free way to explore competitive dynamics.
Careers Links
This topic opens up a wide range of career-related insights, linking directly to Gatsby Benchmarks 5 and 6:
Marketing and advertising roles: Understanding how competition influences branding and promotional strategy.
Business analysis and consultancy: Evaluating market environments to make strategic recommendations.
Entrepreneurship and start-ups: Making tactical decisions in a competitive landscape.
Public sector roles: Regulating monopolies and promoting market competition through policy.
Teachers can reinforce these links using case studies or simulations that mirror real workplace decisions.
Teaching Notes
What works:
Start with familiar examples: Students grasp competition best when they can relate it to things they buy or use.
Use role-play or simulation tasks: Get students acting as businesses responding to competitive threats.
Incorporate comparative tasks: “Which market structure benefits consumers most, and why?”
Common pitfalls:
Overgeneralising: Students often assume “more competition = always better”. Push them to consider nuance — e.g. what happens when too much competition leads to unsustainable pricing?
Confusing market structures: Help students clearly distinguish between perfect competition, monopoly, and oligopoly — Venn diagrams or scenario sorting tasks work well here.
Extension ideas:
Challenge higher-attaining students with “regulatory” questions — e.g. Should governments intervene in monopolistic markets?
Use current news stories for in-class debate or short essays — e.g. regulation of tech monopolies like Google or Meta.
For a ready-made solution, Skills Hub’s tools offer plug-and-play simulations and scaffolds mapped directly to this topic. They allow mixed-ability groups to access the same content through experience, not rote learning — saving planning time while deepening understanding.
