Monopolistic Competition Case Study: Furniture Store Market Analysis

This case study examines monopolistic competition within the furniture market. The student observed furniture stores and analyzed their pricing strategies, product differentiation, and marketing approaches. The study highlights how stores compete despite similar products, focusing on factors like store layout, product design, and advertising to attract customers. The student learned that marketing plays a vital role, with stores using strategies like displaying cheaper products at the entrance to draw consumers. The study also emphasizes that in a monopolistic market, competitive advantages are largely based on unique product features. References to academic literature are included to support the analysis. This assignment provides insights into the dynamics of monopolistic competition and the strategies employed by businesses in this market structure.

Running Head: MONOPOLISTIC COMPETITION, CASE STUDY 1
MONOPOLISTIC COMPETITION, CASE STUDY
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MONOPOLISTIC COMPETITION, CASE STUDY 2
My tour to understand the concept of monopolistic competition was based on furniture
stores, stores which sell all kinds of furniture ranging from tables, seats, cupboards to wooden
beds. From one store to another, there were some unique features I managed to observe
especially for products under the same category (Parenti, Ushchev & Thisse, 2017). For
instance, I noticed that despite the fact that those stores were competing under the same market,
prices of similar products were mostly the same and whenever a difference occurred, it was very
small, like of one to two dollars.
Different stores, however, had their products decorated differently from the rest. For
instance, I observed that some stores were selling tables of round shapes, oval shapes and others
rectangular (Kokovin, Goryunov & Tabuchi, 2017). Each of the stores also had its own approach
when it came to product decorations and colors. These and other distinct features allowed each of
the stores to have a competitive advantage to some extent in the market. The stores were also
operating close to each other in that customers could get all they wished to get in the same
locality.
Each store used their most attractive furniture like the display which could attract
potential customers from a distance to enter the stores (Amini, Kumar & Shome, 2018). The
most expensive furniture’s were however placed inside the stores while those which are cheaper
could be displayed at the entrance of the stores. I managed to learn that this was an advertising
strategy considering that consumers are highly scared by expensive products and attracted by
cheap products.
From my experience in furniture stores, I learned that monopolistic market structures
unlike other market structures, prices are not much considered as competitive advantages (Pan &
Hanazono, 2018). I also learned that marketing strategies also play key roles in determining the

MONOPOLISTIC COMPETITION, CASE STUDY 3
fate of each store. Finally, I learned that the competitive advantages in this sector are based on
the efforts of each firm to create some desirable features of their products since the sector offers
similar products.
References
Amini, S., Kumar, R., & Shome, D. K. (2018). Product Market Competition and Corporate
Investments: An Empirical Analysis.
Kokovin, S., Goryunov, M., & Tabuchi, T. (2017). Continuous Spatial Monopolistic
Competition: Matching Goods With Consumers (No. WP BRP 173/EC/2017). National
Research University Higher School of Economics.
Pan, L., & Hanazono, M. (2018). Is a Big Entrant a Threat to Incumbents? The Role of Demand
Substitutability in Competition among the Big and the Small. The Journal of Industrial
Economics, 66(1), 30-65.
Parenti, M., Ushchev, P., & Thisse, J. F. (2017). Toward a theory of monopolistic
competition. Journal of Economic Theory, 167, 86-115.