For each firms, rivals are always significant because they represent a immediate threat its continued presence in the market. A rival may improve a good or service, lower its price, practice more effective marketing, or even introduce an entirely new product that makes established ones obsolete. The point about all these eventualities is that they are best understood in the context of resource allocation in a competitive market environment. Every firm must ask itself what it should produce, how, and for whom – in the knowledge that other firms are out there asking themselves exactly the same questions. Again, this makes economics central to an understanding of the unfolding competitive proves between firms.