Question

Discuss why “ready-to-wear” clothing (like Ann Taylor and Urban Outfitters), clothing for both men and women (like Banana Republic, J. Crew, and Nordstrom’s), women’s specialty clothing (like Motherhood Maternity and Victoria’s Secret) at retail level are all examples of monopolistically competitive firm.

Answer 1

A firm is said to be monopolisticaly competitive if it's product is differentiated, it has a large number of it competitors and buyers.Ready to wear clothing at retail level are considered to be good examples of monopolisticaly competitive firms. Following are the reasons

* varying number of buyers and sellers

The number of buyers and sellers depends on economic factors, the time of the year, and regular changes in fashion. Eah firm produces a small percentage of the total output.

* Differentiated product.

A product can clearly be identified with a particular. This is done through packaging advertising and labelling .All the brands have a label to distinguish it from close substitute, and when item is worn - the label is visible .Brands compete with each other to maintain their popularity.

* Imperfect knowledge

As consumers, we are not in a position to evaluate all the prices and qualities and benefits of a particular article of Costing we may wish to buy.

* lmperfect mobility.

In this industry, the location of the retail outlet can be critical . Retail clothing traders require high customer volume and traffic .

* Selling costs.

Creating a new and distinguishable product, the firm must sell it. This means encouraging the additional expenses of advertising and informing the consumer ,or positioning the retail outlet in an area with the high customer traffic, usually with the high rental cost.

* Non price competition.

All the price is important in the eyes of the consumer, sellers of ready - to- wear clothing often compete in non price Quality is highlighted in this industry.

Thus it's clear that market for ready-to-wear clothing at retail level exhibits the features of a monopolisticaly competitive market or we can say that retail clothing industry is a monopolisticaly competitive industry.