√ Definition of Monopolistic Competition Market, Characteristics, Price System, Strengths, Weaknesses and Examples
Definition of Monopolistic Competition Market, Characteristics, Price System, Strengths, Weaknesses and Examples – In this discussion we will explain the Monopolistic Competition Market. Which includes the definition of monopolistic competition market, characteristics, price system, advantages and disadvantages as well as examples of monopolistic competition market.
Definition of Monopolistic Competition Market, Characteristics, Price System, Strengths, Weaknesses and Examples
For more details, please see the review below carefully.
Definition of Monopolistic Competition Market
Monopolistic competition market is a market that has a form of interaction with demand and supply as well as most of the sellers offer similar but not the same items because each company has its own characteristics alone.
Another understanding of monopolistic competition market is a market that has many producers who produce goods of different styles. In a monopolistic competition market, sellers or buyers have the ability to determine the price of a product. This is because producers produce goods with different styles, so these producers can produce or make products according to market demand.
Monopolistic competition market is between perfect competition market and monopoly market. making the nature of this monopolistic competition market have elements of perfect competition market and market monopoly.
This form of monopolistic competition market was originally introduced by United States economists in the 1930s, namely Edward Chamberlin and Joan Violet Robinson. The occurrence of this competitive market is due to dissatisfaction with the perfect competition market model which is considered unrealistic.
Characteristics of a Monopolistic Competition Market
There are characteristics or characteristics of a monopolistic competition market, including:
-
There are many sellers
Although not as many as in a perfectly competitive market, there are many sellers in a monopolistic competition market. This monopolistic competition market does not have producers whose production scale is larger than other producers. -
The goods being traded are differentiated
Goods made by one producer with other producers in this monopolistic competition market can be distinguished even though the goods produced are the same, there are differences in the style, starting from the packaging, quality, or method purchase.
This difference makes the goods produced in a monopolistic competition market in nature as close substitutes and do not have perfect substitute properties. -
The seller's ability to influence
Producers in a monopolistic competition market have the power to influence the price of goods, although not as strong as in a monopoly market.
This ability can be seen from the efforts of producers to maintain the features of the products they make. For example, in the detergent industry, product A is more famous for its softness, while product B is famous for its fragrance. -
Sellers easily enter and exit the market
Other companies easily enter and leave the market with the condition that they have the ability to make products with different styles and are more attractive than previous products. -
There are promotional activities
The existence of promotional activities can affect the public image of the products the company produces, because in monopolistic competition market price is not the only influencing factor consumer.
Monopolistic Competition Market Price System
Prices contained in monopolistic competition markets can be influenced by companies with special services, brands that have been created by consumers, and the influence of advertising.
In determining the profit or profit of a company in a monopolistically competitive market, it is almost the same as a company on a monopoly basis. The difference lies only in the number of requests.
- For short. Firms in a monopolistically competitive market may or may not gain.
- For the long haul. Companies can get normal profit after the companies are selected scientifically.
Advantages of Monopolistic Competition Market
There are advantages of monopolistic competition, including:
-
Produce Goods Different Patterns
This gives consumers benefits because consumers can choose goods that suit their tastes and abilities so that they can improve their welfare. -
Income Distribution in Society is More Equal
Producer profits that are formed from small companies are normal, so the owners of capital do not have excess wealth. And also the job opportunities created are greater.
Disadvantages of Monopolistic Competition Markets
There are drawbacks to monopolistic competition markets, including:
-
Operations Are Not as Efficient as Perfect Competition Markets
This is due to higher prices, lower production quantities and not achieving efficiency in either product or allocative. -
The company does not have the initiative to innovate
Very limited capital and markets as well as the tendency to gain profits in the long term prevent producers or companies from making innovations.
Example of Monopoly Competition Market
In a monopolistic market, there are product differences or product differentiation, making buyers free to choose the product they like. As in general, buyers are not easy to buy other products, even though there are new products out on the market.
For example, if you are sensitive to KPOP song products and collect all the kpop albums on CDs or cassettes, it's impossible for you to buy dangdut songs and CDs, even though a lot of dangdut songs appear new.
Another example is company A producing clothing fragrance products and company B also releasing them products similar to clothing, both entering the market and consumers who will ultimately judge the product the.
Thus has been explained about Definition of Monopolistic Competition Market, Characteristics, Price System, Strengths, Weaknesses and Examples, hopefully can add to your insight and knowledge. Thank you for visiting and don't forget to read other articles.
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