Monopolistic Competition

By: Leanyssa Green

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What is monopolisitic competition?


  • It is one of the four market structures. It is basically when you have many buyers and sellers at the same time.
  • firms sell similar or unique products to consumers.
  • there are few if any barriers to enter or exit this market.

Advantages vs Disadvantages

Advantages


  • Monopolistic competition is a business atmosphere where competitors can set and manipulate prices with little to no consequences as a result of their strong product differentiation.
  • Monopolies can engage in price discrimination, which is charging different prices to different consumer groups.
  • Companies in a monopoly have the option of determining which customers receive discounts or premiums on goods and services, such as senior.





Disadvantages


  • Consumers have no option, but to pay the price fixed by the monopolist. A monopolist does not face competition, he often exploits the consumers.
  • Monopoly firms often resort to a number of unfair practices to injure or eliminate the rival firms through cut throat competition.
  • For this, many times, firms fix ridiculously low prices far below cost to compete away the rivals. The loss in one market can be compensated by charging a very high price in other markets.

Which brand would you prefer?

A. NIKE

B. ADIDAS

C. REEBOK

D. PUMA

Episode 29: Monopolistic Competition