This type of rivalry occurs because of competition between consumers and producers. Consumers try to find lower costs, whereas producers try to increase their prices. There are limits to individuals' ability to achieve their objectives. For example, if a consumer suggests an extremely low price, the producer will choose not to sell the merchandise to that consumer. Similarly, if a producer sets a price that exceeds what the consumer wants to pay, the consumer will choose not to buy the product.

This type of rivalry can direct market practice because it occurs between consumers. Consumer–consumer rivalry diminishes the exchange of control between consumers in the market. It takes place based on the economic principle of scarcity. When a minimal amount of products is available, consumers will vie for the ability to obtain the products. Consumers who pay the maximum amounts for scarce products bid more than other consumers for the right to purchase the products.

Producer–producer rivalry differs from other types of rivalry. This is a correcting maneuver that occurs only when numerous vendors of a product compete in the market. Because consumers are scarce, producers compete to serve the available consumers. "Those firms that offer the best-quality product at the lowest price earn the right to serve the customers" (Baye, 2010, p. 13).