Question

When opening your own business, how does the presence of monopolistic competition versus an oligopoly with greater market concentration influence pricing?

Answer 1

Monopolistic competition and oligopoly are two different markets where a monopolistic competition might not have a well-defined market share as that ofoligopoly and this is because the monopolistic competition have no barriers to entry but there is product differentiation and that is the reason why if I am entering the monopolistic competition my main aim would be differentiating my product as better as possible when compared to that of the existing products which I can price the product I provided the customer satisfaction levels of the product is also high. However in an oligopoly the cases different where there is a firm with the well defined market share and market leader also exists and here my main target should be capturing the market share because the barriers to entry of oligopoly are high and only in the long run I can revise my investment for which I have to increase the customer base now as a result of which I have to follow the pricing structure followed by the market leader and even at times I have to price my product lower in order to capture the market share and this is the difference that can be observed when entering a monopolistic and oligopoly market