Monopolistic competition and Oligopoly markets.

Monopolistic competition and
Oligopoly markets

Introduction
• Market structure and competition is about changing
behaviour and performances of the firms
• Market are competitive in nature and product
differentiation is part of the market structure
• Real world market is competitive and aggressive

Oligopoly Market
• Have small number large firms
• The products are homogenous and heterogeneous
• The change in price by one affects the other firms
• The fast food industry is part of the oligopoly
structure

Cont....
• Types of oligopoly market
▫Duopoly
▫Pure Oligopoly
▫Differentiated Oligopoly
• Oligopoly are price setter and not price takers
• Have the ability to retain profit

Fast Food Industry Case
• McDonald is one of the leading fast food industry
• It follows the oligopolistic market structure
• Competitors are Burger King and McDonald
• Factors impacting the business: barriers to entry

Cont...
• McDonald acts as a price maker
• Kinked demand curve oligopoly of
McDonald

Monopolistic Competition
• Large number of firms
• Firms compete on the basis of products quality, its
price and marketing
• The slope is downward sloping and the beverage
industry is part of the market structure
• Strive hard for product differentiation

Cont...
• Starbucks and Peet Coffee is an example of
monopolistic competition
• Product differentiation helps to control price
• Firms sell similar products but are not identical
• Low entry barriers

Beverage Industry Case
• Starbucks is one leading coffee retail industry
• Starbucks intends to earn profits in the long run as
per the monopolistic market structure
• The efficiency is neither allocative nor productive
efficiency
• Competing for same customers

Cont...
• Long run equilibrium for the monopolistic
competitive

Conclusion
• Market structure highlights differentiation with the
aim to earn profit
• Monopolistic and oligopoly are part of the real
economy
• Oligopoly dominates market and monopolistic
competition is about product differentiation

References
• Aspremont, C. & Ferreira, R. D. S., 2015. Oligopolistic vs. Monopolistic
Competition: Do Intersectoral Effects Matter?. Core Discussion Paper, pp. 3-
24.
• George Brown College, 2014. Market structures. Documents, pp. 1-5.
• Hagiu, A., 2009. Monopolistic Competition Between Differentiated Products
With Demand For More Than One Variety. Harvard Business School, pp. 1-48.
•
• Mishra, T., 2012. Managerial Economics. School of Management, pp. 1-26.
• Nguyen, D. & Kira, D., 2019. Market Structure, Competition, And Equilibrium
In Electronic Commerce Setting. Research gate, pp. 1-9.

Thank You