Monopolistic Competition in the Retail Industry Essay examples
The retail industry is a prime example of the modern version of Chamberlin and Robinson’s model of Monopolistic Competition (Grewal, 441). The retail industry consists of vast markets with different brands and goods of one common goal, to sell their products. To cater to this rapidly changing market many large scale retailers are findings ways to make their product more appealing to the public in hopes of gaining market share over their competition. As prices rise, customers are forced to buy substitutes of well-known brand names or alter their preferences. This results in the phenomenon known as monopolistic competition.
Monopolistic competition is defined as the result of many firms …show more content…
In monopolistic competition; however, the retail industry faces that demand is down-ward slopping. There are many firms producing very similar products and consumers must be convinced to buy one good in a market where there are endless substitutes. This has been noted in the closing of many retailer department stores. One way firms attempt to make up for lost profits throughout the year is to offer seasonal discounts. This is based on the elasticity of a good or how elastic or inelastic a good is at the time.
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