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MARKET MODEL is the classification of market meaning, it has more buyers and sellers . Charles Darwin an English nationalist, once said that in the struggle for survival, the fittest win out, on the expense of their rivals because they have succeeded in adapting themselves best to their environment. This means competition is much more intense in the business, market place where different people compete with each other in order to emerge on the top and make more profits. This essay will discuss monopolistic competition which is the market structure in which there is a relatively large number of producers offering the similar but differentiated products.
(Roger Leroy Miller 2000) in businesses competition is important where different people like in the question, (Chinese and Indians ) compete with each other in order to emerge on the top and make more profits. this essay will discuss monopolistic and its associated benefits . Firstly each of the entry and exodus (Roger Leroy miller) for any …..element monopolistic competitor , potential competition is always in the background, since sellers in monopolistic competition worry of losing business.
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This type of market helps firms to enter and exit a particular firm without facing problems. The entry and exit of a firms helps to sustain completion since the entry firms can come with new ideologies that can sustain business of the country. Entry increases the number of products from which customers can choose hence reducing the demand faced by each ……….. Already in the market (N. Gregory , Malawi 2001) consequently when firms are making loss, firms in the market has ………………….
To exit . as firms exit customers have fewer products from which to chose.
Secondly, product differentiation: each firm produces a product that is at least slightly different from the other firms, i.e. rather than a price taker, each faces a downward sloping demand curve. (N. Gregory, Malawi 2001) Monopolistically competitive firms turn out variations of a particular product, i.e. they produce product with slightly different physical characteristics (McConnell Bruce 2008) for example Chinese goods are slightly different from Indians, goods like luxury goods are clothes and shoes . Firstly number of firms, each firm has small percentage of the local market and limited ……………. Over market t price. The presence large number of firms ensures that collusion by group of forms to restrict output and set
prices is unlikely (McConnell Bruce 2008) independent action with numerous firms in an industry. Create no feeling of independence among them. Each firm can determine its own pricing policy without considering the possible reaction of rival firms. With so many sellers, each seller has a relatively small share of the total market (McConnell Bruce 2008) this makes the circulation of money very easily as no one will regard other person having more money than him. Example can be of chinese and Indians. However monopolistic competition has many benefits that can contribute to the development of the country. The following are some of the benefits .
To begin with, it fosters innovation. Competition in business facilitates sellers to sell new things that change the lives of people. For instance, they sell goods like torches, radios that can soften the lives of people at the same time lead to the development of the country. Further more, availability of resources. Whenever there is competition the resource availability take place. The availability of goods and services creates economic growth that can lead to unlimited wants of consumers hence leads to the development of the country. I.e. if resource are available, it lead the country to develop, since the activities like infrastructures occur.
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