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Monopolistic Completition

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Monopolistic Completition
Monopolistic Competition
Joshua K. Hodgin
American Military University

Monopolistic Competition

Can you imagine owning a company that sells a product that is vastly different from other products in the same market? This is known as monopolistic competition. In my research I found an article named “The Advantages of Monopolistic Competition” written by Catherine Capozzi that talks about different advantages of monopolistic competition. The areas covered by the author were; pricing, product quality and development, and price discrimination. I will explain how each of these topics relates to the material learned in my microeconomics course. Before I begin discussing the different topics, allow me to explain a little about monopolistic competition.
According to Economics Online, “the model of monopolistic competition describes a common market structure in which firms have many competitors, but each one sells a slightly different product” (Economics Online). There are many examples of monopolistic businesses and a few that were mentioned in the article were Microsoft, Sirius, XM Radio and Jostens (a company that sells high school rings). If you think about each of these companies you will realize the products they sell are different from others in the same market, but they control the market to some degree. Any of these companies are able to manipulate the prices of their product without having to worry about a decline in sales. The economy has become somewhat dependent on each of these companies and will pay the suggested price. Everything is done within reason of course, but in the end you would probably pay $500 for the newest version of Windows from Microsoft just to keep up with current times. This is a great lead in to the advantages of pricing.
The author the article I read stated, “the ability to set higher prices is a primary advantage of monopolistic competition” (Capozzi, 2012). She goes on to explain how prices are increased just for


References: Capozzi, C. (2012). Chron. Retrieved December 23, 2012, from The Advantages of Monopolistic Competition: http://smallbusiness.chron.com/advantages-monopolistic-competition-20585.html Economics Online. (n.d.). Retrieved December 23, 2012, from Monopolistic Competition: http://economicsonline.co.uk/Business_economics/Monopolistic_competition.html
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