Monopolistic Competition

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Monopolistic Competition & Price Discrimination:

Monopolistic Competition & Price Discrimination Aishath Eaman MA-13

What is Monopolistic Competition?:

What is Monopolistic Competition? It is a market structure in which there are several or many sellers; each produce similar, but slightly differentiated products.

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Differentiation of the product can be on the basis of colour , design, size, taste, fragrances, etc . Each producer can set its price and quantity without affecting the marketplace as a whole.

Features of Monopolistic Competition:

Features of Monopolistic Competition There are many sellers but no seller is big enough to influence the market price. Under monopolistic competition firms produce very close substitutes.

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3. Firms under monopolistic competition together form a group. It is not an industry. 4. Goods produced are differentiated . Differentiation means the goods are made to appear somewhat different and superior to those produced by other firms.

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5. Selling Cost (SC) is another outstanding feature of a monopolistic competitive market. This is a form of advertisement expenditure.

What is Price Discrimination?:

What is Price Discrimination? Price discrimination is the practice of one retailer, wholesaler, or manufacturer charging different prices for the same items to different customer.

Criteria for Price Discrimination:

Criteria for Price Discrimination Difference in Price Elasticity Depending on the preference of buyers the product has different elasticity with different customers.

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2. Market segmentation The market must be divided into sub-markets with different price elasticities of the customers.

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