Monopolistic competition

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Basically,monopolistic competition is a type of an imperfect competition wherefirms or producers sell various products distinguished by eitherbrand or quality. Notably, the products are not perfect substitutes’and firms have some power to set their different prices (Chris,2009).

Duringthe week, I visited Rowe`s IGA Supermarkets grocery stores where I ama regular customer, to check on the characteristics of variousproducts in terms of the package, prices and brand names. I decidedto compare the prices of different varieties of cashew nuts. I notedthat the prices were almost similar, for instance, a 200g of cashewnuts had a price tag of $ 3.40. On the other hand, Organic FairtradeCashew Nuts were being sold at $ 3.60 whereas a 250gram of RoweCashew Nuts were going for $ 3.33. All the three types of cashew nutswere from different companies. Each product had its own unique logoand design of packaging in an effort of trying to attract morecustomers subsequently increasing its consumption. The Rowe CashewNuts had the logo of the grocery store and the product was packed at250g, a cheaper price compared others. Moreover, the products werelocated close to each other on the shelves so that it can be easy forthe customers to compare their prices. It is also important to notethat the Cashew Nuts and Rowe Cashew Nuts are close competitors dueto their prices. Also, they are the most preferred products by mostof the cost-conscious consumers. Besides, Organic Fairtrade CashewNuts targeting higher end consumers were placed on the shelvesopposite to the ones containing Cashew and Rowe Cashew Nuts. From theobservation, I noted that the relatively expensive variety of cashewnuts had been allocated a smaller display space on the shelvesimplying that they had a lesser share of the market and command brandloyalty (Chris, 2009).

WhatI learned about monopolistic competition and concepts relevant tothis week’s topic

Ilearnt that in monopolistic, the competition is characterized by alarge number of sellers and buyers, also, companies or organizationscan fix prices for their own products. Moreover, each product has aunique branding with diverse qualities and quantities. This isrelevant to this week’s topic on monopolistic competition based ontwo concepts. First, the products are differentiated by theirpackages, quantity, prices and branding. Apart from that, there aremany buyers and sellers including the various producers, suppliers orcompanies as well as the consumers of those products (Chris, 2009).


ChrisGnandi. (2009,Nov 29). TeachMe: Monopolistic Competition[Video File]. Retrieved from

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