Monopolistic Competition


It is assumed that—as in pure competition—firms do not collude on price or quality, and also that free entry into the industry (or exit from it) is possible. The monopolistic element in monopolistic competition is product differentiation: each firm has its own unique variety of product. This gives the firm some monopoly power, since each enterprise will have a “clientele” of customers closest to it on the ring of preference. In a particular city, for example, there may be a dozen supermarkets. They may be closely competing in some respects, but each has some monopoly power due to geographical location on other special features that make it the favorite of a fraction of the customers. We see that a group of monopolistically competitive firms produce more and charge less than would a monopolistic operating several plants.

 Each independent firm would produce more output than a monopolistic  would allow its point to produce. The reason is that the independent firm’s perceived demand curve is more elastic (flatter) than the monopolist’s per-plant demand curve.

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Connoting Business Opportunity


What is being offered with businesses is usually an idea which may work, depending on your business or sales abilities. It is up to you to establish an area or your clientele. You are usually provided with the tools, such as the vending machines, the inventory, or the samples and the business opportunity. For this, you will pay a price—the rest is up to you.

Many of the businesses will present you with an idea that is made to sound so exciting and profitable, you can’t wait to sink your teeth into it. Caution! Do not proceed or pass go without sound, professional accounting advice. Remember: you are usually buying an unestablished business using someone else’s ideas, for which you may be paying too much. You are starting from scratch, and those promises of big money usually don’t pan out. Warning! You must be especially diligent about so-called business opportunities that offer huge, quick returns. There are people who are ready to take your money and run, or sell you a business that is either non-profitable, not quite legal, or makes money for no one but the vendors. You have to reach not only the market, but the business, the business owners, and the history of the products they are selling. Before making any final decisions, consult with a lawyer and have an appropriate agreement for sale drawn up. If problems arise between you and the vendor your agreement will become a valuable document in court.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please contact www.asifjmir.com, Line of Sight