The chief economic argument for competition is that it serves as the basis of business improvement and business development. Who has not heard the common saying, "Competition is the life of trade"? Spurred on by competitors the business man seeks better sources of raw materials, better methods in production, and better markets; which in almost every case means higher quality and lower prices. Under the pressure of competition he substitutes new and better methods for old ones, and if he is to succeed, he must not only be alert to the improvements of his competitors, but also he must on his own initiative institute improvements of his own.
The business world is literally alive with industrial improvement. Large manufacturers maintain expensive laboratories where their competitors' products as well as their own are carefully tested for excellence; where experiments are carried on with the single purpose of improvement. Railroads, too, are alive to any change that will improve their service. Competing lines fight for supremacy in the matter of speed, of comfort, and of safety. They employ high-priced engineers to study the pulling power of engines, the effect of speed on rails and roadbed, and the advantages to be gained by straightening tracks and cutting down grades. They experiment with different kinds of fuel, and with different makes of engines and cars. Even among farmers competition leads to improvement in the quality of seed, in cultivation, in stock-raising, in harvesting, and in a variety of other ways. For most of us the best examples of the influence of competition on improvement are found in the retail trade. One grocer installs a large sanitary refrigerator, another replaces his old horse-driven delivery wagons with automobile trucks, while a third makes arrangements to permit his customers to wait on themselves as far as possible. At the bottom of each change is the desire to get more business. The first has an advantage in handling perishable goods, the second cuts the expense of delivery, while the third is able to reduce his number of clerks. In the end many other grocers, unwilling to be bested by competitors, adopt these innovations. Thus in its endless round industrial improvement goes on its way stimulated by the force of competition.