Monopolistic Competition Of The Retail Industry : A Look At Fast Food

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Monopolistic Competition in the Retail Industry: A Look at Fast Food From an economic perspective, the retail industry can be identified as having four distinct forms of competition: perfect competition, monopolistic competition, oligopoly, and monopoly. This paper shall examine those constructs briefly, and then discuss in depth, the concept of monopolistic competition in the retail industry, using fast food as an example. There are really limited examples of perfect or pure competition, whereby there is no one supplier big enough to have market power sufficient to set pricing for a product that everyone is selling. By way of example, one might look to a wholesale fish auction and the dozens of fishermen that present the same catch for auction at market each weekday morning. While some fish may vary as to grade, like Ahi or Yellowfin tuna, there is more likely than not, no one fisherman who can drive the market price for tuna on any given day. In this fairly pure competition construct, there can be many buyers and sellers, and minimal barriers to entry or exit from the market. Monopolistic competition also features an abundance of sellers, as in the example above, but not all products are necessarily identical, as might be the case with raw yellowfin tuna. Products under this competitive construct may differ slightly or be perceived as being different, even though they actually are not. Product differentiation could occur through quality, location, brand name, price

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