Question

How does economic rivalry take place in monopolistic competition? Does it even make sense to talk about "product differentiation" when you're choosing among different places to buy the same brand of something like soap or socks (various clothing and department stores, large grocery stores, online vendors--we're considering differentiating the vendor, in this case, not the product)? Similarly, does this concept apply when we're considering something like gardening services, or getting concrete poured, or hiring a plumber?

Describe the different aspects of product differentiation and price competition. If you can come up with your own example.

As in the past, I'm looking for a thoughtful paragraph or two that shows you're thinking about monopolistic competitors (not oligopolists), so please spend as much time thinking as you do typing. Please comment substantively (at least a couple of sentences) on two of your classmates' responses.

Answer 1

The competitive conflict that takes place in monopoly competition is non-price conflict. There are many different types of non-price rivalry. Suppliers may, for one, offer products with different features or quality to the consumer. Another way is for vendors or firms to offer different levels of customer support. Place is another significant element in monopoly rivalry. Then, the type of packaging and the means of marketing and advertising make one product more attractive than the other.

When we choose between different places to buy the same brand of soaps and socks, vendor differentiation will be the most important part of product differentiation. Since we are buying the same brand of a product from different locations, therefore talking about product differentiation does not make much sense. In terms of vendor differentiation, we can talk about product differentiation. Factors such as the location of the manufacturer and the location of the vendor or retailer play an important role in the differentiation of the product. In reality, however, it is vendor differentiation.

In the same way, after sales services also affect the trust of the customers. Similarly, when we're considering something like gardening services, or getting concrete poured, or hiring a plumber, it's actually vendor differentiation. The expertise and efficiency of the hired worker is the basis of our decision. Although there may be little difference in the quality of concrete, plumbing tools and gardening equipment or seeds, they will still remain largely the same product.

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