Monopolistic competitive markets and oligopoly are market structures. Monopolistic competitive market is a market structure with many buyers and sellers with differentiated products. The products are not close or perfect substitutes. In oligopoly, there are very few sellers in the market, therefore, becoming easier for them to inter relate easily with each other. (Tewari, 1996).The both have different features thus, becomes straightforward to distinguish them from each other.
An example of a monopolistic competitive market can be taken from the toothpaste industry. There are many different types of toothpaste and also many consumers. It is upon the strategies put in place by the producers in order for them to be strategically placed to win the customers loyalty (O’Connor, 2000). This helps the producers to remain relevant in the market. An example of an oligopoly market structure can be sighted from the banking systems in Canada. Different banks have come together and agreed on the terms therefore, dominating the banking system in the region.
All businesses engage in the different market structures where they feel they can acquire maximum profits. This is the main motive why firms are in the businesses. In monopolistic competitive markets, mostly practice non-pricing competition.
This is because, the number of the parties involved is many and, thus, need to put their efforts in branding and advertising the products to be able to attract a great number of consumers thereby making numerous profits (Rittenberg, 2008).The consumers are able to enjoy a wide variety of products, thus, can never be exploited in terms of high pricing. In oligopolistic markets they embrace price competition as a change in price of a product by one firm, requires the other firm to adjust. Also many firms here merge in order for them to achieve the power of collective bargaining. Here, the consumers may end up being exploited as the firms are the price setters of their products.
References:
Tewari, D. D., & Singh, K. (1996).Principles of microeconomics. New Delhi: New Age International (P) Ltd.
O'Connor, D. E., & Faille, C. C. (2000). Basic economic principles: A guide for students. Westport, Conn.
[u.a.: Greenwood Press.
Rittenberg, L., Rittenberg, Libby.,Tregarthen, Timothy D., &Flatworld Knowledge. (2008). Principles of
microeconomics. Nyak, New York: Flatworld Knowledge.
