While I'm doing simple caveman economics, I want to make a very simple point about market competition that I find useful to keep in mind. The fact that markets are “competitive” confuses a lot of people into thinking markets involve some sort of dog-eat-dog zero sum bloodsport. But the competition is competition for the ability to cooperate with other folks in the market. When I cut my prices to undersell the other guy, what I'm doing is trying to give the consumer the most attractive terms of cooperation. In the market, people are clamoring to cooperate with you! They're trying to make you even better off than the other guys who are also trying to make you better. (Think of those Lending Tree commercials where bankers are in your living room falling over each other to give you the lowest interest rate.) If you think of market competition as competitive cooperation, the market will start to look like this incredible system of distributed niceness. So when you buy something today, be sure to smile.