Monopolistic Competition Examples

Introduction to Monopolistic Competition Examples

In case of the monopolistic competition many of the firms compete with each other but at the same time sell the products which the distinct with that of the product of competitors in some way. Since in multiple areas monopolistic competition can be seen, all examples cannot be provided. So, some of the examples of monopolistic competition are given below showing the different situations.

Examples of Monopolistic Competition

Below are the Examples of Monopolistic Competition:

Example 1 – Fast Food Company 

The Fast Food companies like the McDonald and Burger King who sells the burger in the market are the most common type of example of monopolistic competition. The two companies mentioned above sell an almost similar type of products but are not the substitute of each other. Now which product the particular consumer likes the most and of which company totally depends on him. Apart from the burger, other products are also sold by these companies like French fries soft drinks, etc. All these products of the mentioned companies are of similar nature but there is no congruency between the products sold by the two as each one has a slightly different shape and taste. This is the monopolistic structure.

Example 2 – Hairdresser 

The service provided by the hairdressers in the market provides one of the most famous types of the example of the monopolistic competition. There are certainly lots of hairdressers and each of the hairdressers has a slightly different type of skill and thus each one of them sells a slightly differentiated product to the consumer in the market. Also, they have different premises situated in a different location where they provide the services. These things differentiate the product in the eyes of the consumers. The hairdresser service is not the big chain industry and thus keeps them away from the more oligopolistic market structure.

The prices offered by the hairdresser will depend on the services offered by them and its uniqueness. If the particular hairdresser is known for providing the best services in the particular market then it can increase the prices of its services as they know that consumers can pay slightly more amount of money for their superior services. The uniqueness gives the power to charge more amounts. Thus it is the service that gives reputation to the firms for the quality they are offering. Also relatively there is a low barrier for exit and entry for setting up a new hairdresser shop which is one of the important features of the monopolistic structure.

Example 3 – Bakery Shop 

There are certainly a lot of bakeries in any town and each one of them sells a slightly differentiated product to the consumer in the market. But if in a particular area of the town there exists only one bakery, then it can demand a slightly higher amount of price for its products. The firms under monopolistic competition with their ability can gain a greater degree of market share due to which it can increase the prices of its products.

Apart from the above if any particular bakery is known for providing the best pasties and pies in the town then it can increase the prices for their pasties and pies as they know that consumers can pay slightly more amount of money for their superior product. This is the establishment of brand name and loyalty. Also relatively there is a low barrier for exit and entry for setting up a new bakery shop which is one of the important features of the monopolistic structure.

Example 4 – Running Shoes Market 

There are a number of brands if one is searching for running shoes like Adidas, ASICS Nike, etc. The market of the running shoes seems to be in full competition on the one hand as there are many brands present competing with each other as there are low barriers to entry and exit. However market of the running shoes seems to be under the monopolistic structure on the other hand because the uniqueness which each of the brands of shoe offers gives them the power to charge the price which is different from the other competitors. The companies can increase some of the features in their product and charge the consumer accordingly for the new feature. If the consumer finds the new feature worth for its price then he would buy it otherwise not.

Example 5 – Restaurants 

One can see that there are many restaurants in any town and each one of them competes on the quality of food and prices of the product offered in the market. In every area, it can be seen that some restaurant charges $ 50 for one product and for the same product another restaurant is charging $ 80. The price of the product of the restaurant depends on many of the factors such as the quality of the food, place of the restaurant, other services they are offering to the consumers, etc. This is the product differentiation among the different restaurants which is the key element of any business. These products offered are similar in nature but are not a substitute for each other. Also, there is a low barrier in setting up of new restaurant and exiting from it which is also an important feature of the monopolistic structure.

Conclusion – Monopolistic Competition Examples

Thus monopoly is the industry or the sector which combines the elements of both monopoly and the competitive markets. There is freedom to the players to enter and exit from the market along with offering the different product which has similarities but is not the substitute of each other. Therefore they can maintain the prices of the products or the services they are offering on their own. In the case of the industry or area where the monopolistic competition exists and there are super profits, then it will encourage the new firm to enter the market as there is the freedom of entry which in long run will lead to the normal profits. Thus the above-mentioned examples are some of the examples of monopolistic structure in the different industries. There are various other examples as well which shows that monopolistic competition exists in various different markets or areas.

Recommended Articles

This has been a guide to Monopolistic Competition Examples. Here we discussed the top 5 Monopolistic Competition Examples along with a detailed explanation. You can also go through our other suggested articles to learn more –

1. Customer Acquisition Strategy | Examples | Process
2. Monopoly vs Monopolistic Competition
3. Monopoly vs Perfect Competition