Monopolistic Competition


What is Apple?

  • Apple designs, develops, and sells consumer electronics, computer software, and online services.
  • Mostly known for their iPhones, iPod, iPads, and Mac

So why are they considered monopolistic competition...?

First things First- What is Monopolistic Competition?

  • Many producers selling similar or unique products
  • Few barriers to enter market
  • Sellers=price makers (they choose the price)
  • Producers use advertisement to try to differentiate their products

So what makes Apple monopolistic competition?

  • Apple competes with many different producers to sell smartphones and other devices.

Who are some of these producers?

What else?

  • Apple uses advertisement to try to differentiate their i- products from other smartphones and devices
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So what are the disadvantages?

  • Higher Prices- since producers are price makers, they choose the price. Because Apple is so popular, they are able to make their products more expensive but not lose many customers.
  • Worker's livelihood- since producers can control most everything, that means they also set their worker's wages. There has been rumors of Apple not protecting their Chinese factory workers and even employees working in Apple stores claiming they are treated like "criminals"
  • Other company's/loss of competition- when one producer gets really powerful, it can result in less competition (higher prices) and the failure of other producers to succeed. Apple has come to have 92% of the smartphone industry, and other producers like Nokia have been struggling due to this.

There are some advantages too!

  • Choice and Variety- due to there being many different smartphone producers- if a customer does not like Apple, they can get a Samsung phone or a HTC phone.
  • Incentive- due to competition, Apple continually is trying to improve their products for consumers with updates and new phones (like the iPhone 6s)
  • Knowledgable- because of the advertisement, consumer learn more about what an iPhone can do- they become more knowledgable about what they are buying.

Still confused?

Watch this short clip about monopolistic competition.

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