Monopolistic competition

Monopolistic competition

Monopolistic competition is a market structure characterized by many competitors selling roducts which are slightly different from each other (Parenti, Ushchev, Thisse, & J, 2014). From the market observation canned vegetables perfectly fit characteristic exhibited by the market.
For instance taking the case of Bush’s Best Original Baked Beans, it is one of the top-rated high priced canned beans at 2.18$ per small park and with a market consumption of around 80% in the U.S and Canada. The product is seasoned with bacon and brown sugar which distinct it with other products in the market and packaged in a brown can with a product logo on the top. Close related product competing with Bush’s Best are Van Camp’s and canned Broad Beans which commands a relatively lower price in the market. In particular, Broad Beans consumers are low-income earners.
On the grocery shelves, canned beans product are shelved together and arranged in a sequential manner relative to product prices. Products are arranged in order of consumer’s purchasing power and buying demand. Bush’s Best Beans is racked together with other top-rated canned beans whereas low priced canned beans are ranked together.
Van Camp’s is one of the competing products which have a relatively narrow market penetration. Over the years in existence, it has become one of the most consumed products, mainly by the middle-income earners.
Under monopolistic market, it’s difficult for consumers to differentiate products as it’s difficult to tell whether high rated products are any better (Parenti et al., 2014). This uncertainty brings imperfect information to the consumers making them unable to tell which the fair price is.

References

Parenti, M., Ushchev, P., Thisse, & J.-F. (2014). Toward a theory of monopolistic competition. Louvain-la-Neuve: CORE.

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