Question

Assignment 9.1 - Monopolistic Competition versus Oligopoly

Visit some sources outside of your text. Name and describe the differences in these two market structures. In which structure would you rather compete? Which structure is more likely to include:

Grocery stores

Fast food restaurants

Bakeries

Banks

Insurance agencies

Local diners

Insurance companies

Colleges

Repair shops

Cell phone carriers

Publishers

Once you have identified the market structures and provided answers to the questions above, now it is time to think of a potential Blue Ocean strategy for a firm in one of these markets. Explain the strategy and show how it could give the company more than just a competitive edge. Submit this paper to the Assignment 9.1 drop box once you have completed all elements of this paper.

Answer 1

Oligopoly is a market structure containing a small number of relatively large firms, with significant barriers to entry of other firms. Whereas, monopolistic competition is a market structure containing a large number of relatively small firms, with relative freedom of entry and exit.

COMPARISONS:

1) Many or few: in oligopolist market structure there are few firms in the market, whereas in monopolistic competition consists of many firms.

2) Dominance:  In some cases status depends more on the dominance of a few firms rather than the total number of firms in the industry. An industry with 3,000 relatively equal firms is most assuredly monopolistic competition. However, an industry with 3,000 firms, that is dominated by 3 relatively large firms, is a most likely oligopoly. For example, the automobile industry has thousands of firms, but a handful of the largest firms dominate the market, making it an oligopoly.

3) Geographical location: A particular industry may be a monopolist in a large city and an oligopolist in a smaller town.

4) Barriers to entry: in the oligopolist market structure the barriers to entry are high. but in monopolistic competition, the barriers to entry are less. There are free entry and exit of the firms in monopolistic competition.

It is always better to compete in monopolistic competition structure and capture the market by product differentiation and selling cost. Because it is very hard to survive in the oligopolist market with a new firm because oligopolist can adopt different entry restriction strategies like limit pricing etc

OLIGOPOLISTIC MARKET MONOPOLISTIC MARKET

Banks   Grocery stores

Insurance companies    Fast food restaurants

Colleges Bakeries

Cell phone carriers Local diners

Publishers   Insurance agencies

Repair shops

BLUE OCEAN STRATEGY

Consider Cell phone carriers. let's say jio (an Indian company of cell phone carrier). Jio created a Blue Ocean shift by investing a massive sum of $40 Billion ie INR 2,50,000 lakh crores. That too, in Newly established 4G/5G LTE Technology. Which is an example of differentiation and started to adopted low-cost strategies to open up new market place and open up new demands for the firm. now in present, nearly 60% and more of the total population is using jio services.