GROUP

PINKTEREST
MEMBERS:
BLESSIE MAE CAHILAP
FIONA AINE BALANE
XYLEE JANE REYES
APRIL ROSE CERCADO
PAULO RECTIN
MONOPOLISTIC
COMPETITION
 LITTLE BACKGROUND ABOUT
MONOPOLISTIC COMPETITION
• MONOPOLISTIC COMPETITION as a
market structure was first identified
in the 1930s by American economist
Edward Chamberlin, and English
economist Joan Robinson.
 WHAT IS MONOPOLISTIC
COMPETITION?
Under the MONOPOLISTIC COMPETITION, there are a large
number of firms that produce differentiated products which
are close substitutes for each other. In other words, large
sellers selling the products that are similar, but not identical
and compete with each others on other factors besides
price.
• Monopolistic Competition is the
combination of perfectly competitive
markets and monopoly.
–It resembles a perfect competition
because there are many firms in the
industry and there are free entry and
exit.
–It is like monopoly because the firms
are the Price Maker.
 DEGREE OF
COMPETITION
• In MONOPOLISTIC COMPETITION,
the degree of competition is VERY
TOUGH and HEAVY because there
are a large number of firms.
 NUMBER OF FIRMS
• A LARGE NUMBER OF FIRMS operate
under the monopolistic competition,
and there is a stiff competition
between the existing firms.
BARGAINING POWER
OF CONSUMERS
• In MONOPOLOSTIC COMPETITION, the
consumers are the PRICE TAKER and the firms
are the PRICE MAKER. Thus, an individual firm
is not a price taker but has some influence
over the price of its product, i.e. they can lose
customers if they raise prices too much.
 BARRIER TO ENTRY
• The barrier to entry in MONOPOLISTIC COMPETITION is
LOW. With an intense competition among the
firms, the entity incurring the loss can move out of
the industry at any time it wants. Similarly, the
new firms can enter into the industry freely,
provided it comes up with the unique feature and
different variety of products to outstand in the
market and meet with the competition already
existing in the industry.
 PRODUCT
DIFFERENTIATION
• This is one of the major features of the firms
operating under the monopolistic competition,
that produces the product which is not identical
but is slightly different from each other. The
products being slightly different from each other
remain close substitutes of each other and hence
cannot be priced very differently from each other.
 HEAVY EXPENDITURE ON
ADVERTISEMENT AND
SELLING COSTS
• The firms incur a huge cost on advertisements
and other selling costs to promote the sale of
their products. Since the products are different
and are close substitute for each other; the
firms need to undertake the promotional
activities to capture a large market share.
 ADDITIONAL INFORMATION:
• In the long run of this market structure, there
can be no economic profit because there is
free entry into the industry. If there are any
profits, others will enter the industry,
positioning themselves to take away
costumers from the most profitable sellers.
• Entry and exit are easy which affects the
ability to sustain profits.
EXISTING CORPORATION THAT USES
MONOPOLISTIC COMPETITION
 INFORMATIONS ABOUT NIKE:

• Nike, originally known as Blue Ribbon Sports

(BRS), was founded by the University of Oregon
athlete Phil Knightand and his coach, Bill
Bowerman, on January 25, 1964.
• The company offers various categories of shoes
including running, training, basketball, soccer,
sport-inspired urban shoes, and kid’s shoes.
• Being arguably the biggest manufacturer of sporting goods, Nike’s
supply is very large; this added with the fact that they recognize
themselves as a premium product, influences their prices in the way of
increasing their prices, as seen with their price increase in 2014.
• Their products and services are differentiated from their competitors
with their signature logo, the swish, being on mostly all of their items.
Their marketing is also a factor which include their slogan “Just Do It”
and their campaign with Colin Kaepernick, with the motto being
“Believe in something. Even if it means sacrificing everything”.
 WHY NIKE IS CONSIDERED AS
MONOPOLISTIC COMPETITION?
Nike considered as monopolistic competition
because it has a thousand of competitive brand
such as Adidas, Puma, Reebok, and many other
brands but with approximately the same price yet
slightly different with each other.
 REFERENCES
• Businessjargons.com
• Prezi.com “Competition and Market Structure” by Kara Maurer on
Feb 29, 2016
• Prezi.com “Nike: Monopolistic Competition” by John Manoukarakis
on Dec. 17, 2018
• www.intelligenteconomics .com
• www.economicshelp.org/blog/311/markets/monopolistic-
competition/
THANK YOU!
<3 <3