By: Leanyssa Green
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
- 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.
- 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.
Episode 29: Monopolistic Competition