Question

Is a gasoline or gas station an example of monopolistic competition or an example of oligopoly? Why? How can 3 different service station make a profit at the same intersection?

Answer 1

Chosen advertises inside the retail area give the best representation of monopolistic rivalry. The retail gas showcase is a decent illustration. There is an envisioned separation among the marked fuels in view of publicizing. Be that as it may, there is likewise a genuine separation due to locational points of interest. You will want to refill your auto at a gas station that is strategically placed. This gives the station proprietor some control over the cost charged. A service station at a perfect area might have the capacity to charge a couple of pennies a gallon and not lose every one of its clients, or drop the cost of gas without pulling in a limitless number of clients. Each station confront a descending slanting interest for its item. Section hindrances into the retail gas showcase are not huge. Thusly, if any station pulls in an unusually extensive measure of business and creates anomalous benefits, it is likely that another station will open close-by. Passage should proceed until the point when each station approaches financial breakeven.

One last idea on our retail fuel case. Monopolistic rivalry accept that there are numerous organizations in the business and that no firm recognizes some other single firm as its opponent. This implies albeit each firm may respond to what is occurring in the business all in all, its estimating methodology isn't controlled by the value set by some other single firm in the business. At the point when perceived association exists between any two firms, we at that point have an instance of oligopoly. Now and again and in a few areas the retail gas market might be preferable portrayed by oligopoly over by monopolistic rivalry. For instance, when match service stations at inverse road corners take part in a value war or a deceitful evaluating game plan.