Points of Monopolistic Competition

Question: Discuss about the Points of Monopolistic Competition. Answer: Introduction: It can be stated that monopolistic competition is a type of imperfect competition. In this respect, it can be mentioned that there are several number of producers in the market, who are used to sell differentiated products from the other sellers. Therefore, it can be mentioned that the products are not perfectly substitute. This study has highlighted how the producers differentiated their products from the others under this type of market structure Roberts (2014). I am going to open a small soap manufacturing organisation. Therefore, I have planned to launch new baby soap in New Zealand. In this connection, it can be mentioned that the I have planned to make its products differentiated from the other soap manufacturing organisations and therefore, have aimed to the colour and essence of the soap. It is known that all of the babies soap manufacturing organisation mainly focused to the quality of the product as it is related with the skin of the babies, however, I have planned to manufacture a baby pink coloured soap along with the quality. This colour is highly preferable to the baby girls. Moreover, the smell of the soap is very nice, so that the users want to use the product. In this connection, it can be assumed that position will make the business different from the other organisations (Nikaido, 2015). The producers of my organisation under monopolistic competitive market of New Zealand is seeking from the real or perceived non price disparities. In addition, it can be opined that the cross price elasticity of demand among the products of the restaurant is positive in this type of market structure. More precisely, it can be mentioned that the cross price elasticity would be higher. On the other hand, it is known that the products under monopolistic competitive firms are comparatively close to each other but imperfectly substitute. Therefore, it can be inferred that the colour and essence of the baby soap, which are produced by the organisation can be differentiated from the others. References Nikaido, H. (2015).Monopolistic Competition and Effective Demand.(PSME-6). Princeton University Press. Roberts, K. (2014). The limit points of monopolistic competition.Noncooperative Approaches to the Theory of Perfect Competition,3, 141.