Competition is not directly observable, but we can look at some proxies for it to assess how it has changed. Two proxies for competition are mark-ups and margins. Mark-ups measure the ratio of a firm's sale price to its marginal cost (i.e. the cost of supplying one more unit of the good) (Graph 5).
Net margins capture the ratio of prices to the average cost of production (Graph 6). When competition increases, this is likely to put downward pressure on mark-ups and margins. Graph 5  http://www.rba.gov.au/speeches/2018/sp-dg-2018-08-22.html  7/23  22/08/2018  Low Inflation | Speeches | RBA  Graph 6  Both of these proxies show some evidence of increased competition.