The article explores how social interactions affect competition between two firms in terms of quality, pricing, and profits. Two types of social interactions are studied: one that expands the market and another that enhances the value for consumers. The research shows that social interactions lead to lower prices and more intense competition, but they also impact product quality and firm performance differently. Market expansion benefits both firms and consumers, while value enhancement mainly benefits the high-quality firm and harms the low-quality one. These findings suggest that firms need to understand and leverage social interactions to develop effective marketing strategies in competitive markets.