In general, cooperation can be understood as joint production (activity) or consumption by a group of people for their mutual benefit.1 It is the opposite of competition which is based on individual efforts to achieve a goal. Some people perceive competition as morally suspect in comparison to virtuous cooperation.
However as Timothy Taylor says: “..competition and cooperation are not polar opposites.(…) Competition refers to a situation in which people or organizations (such as firms) apply their efforts and talents toward a certain goal, and they receive results based substantially on their performance relative to each other. (…) Cooperation refers to a situation in which the participants seek out win-win outcomes from working together.”
If carried out in an unethical or illegal way, competition and cooperation are both unjustified, for example when criminals cooperate or sportspersons compete in an unfair way. Whereas when consumers seek the best deal and companies seek higher profits, only competition can provide optimal solutions.2 And only through cooperation can market participants get the most out of exchange, as the modern market is a network of mutually beneficial interdependencies.3 Therefore markets are a blend of competition and cooperation which are both beneficial for societal development.
There are different approaches as to how to deal with the concepts of cooperation and competition in economics. Depending on the point of reference, one can talk about cooperation and competition between citizens, companies, cities, regions, nations or states. At the national level, cooperation and competition concepts can be analyzed internally (within Europe), or externally (the relation between Europe and the rest of the world).
As complicated as it may be, there is a solution to treat it in a comprehensive way; international trade analysis. International trade analysis helps to examine the processes of economic cooperation and competition between countries, as these are both aspects of economic exchange. International trade is about purchasing, selling or exchanging goods and services across national borders. An additional form of international trade is foreign direct investment (FDI), which means acquiring the ownership control of a company in another country.
