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The Neighborhood Bike Shop

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An article titled Innovations Threaten the Neighborhood Bike Shop written by Jim Rendon was published by the New York Times on January 27, 2016. I remember reading this article in early February and when we covered the chapter on monopolistic competition, it came to my mind again. The article begins with the readers being introduced to Sean Sweeney, a cyclist that lives in Wayne, Pennsylvania. Mr. Sweeney expressed his hatred toward hauling his bikes to a local bike shop to be tuned up and repaired. It is a lot of work for a fifty-nine-year-old man to be doing and it is also an inconvenience. But all of his problems are solved when he is introduced to Seth Samson, a bicycle mechanic who works for a company called Velofix. Velofix is a company …show more content…

Also, the bicycle manufacturing industry exhibits characteristics of a monopolistically competitive market. A perfectly competitive market is a market structure where all firms sell an identical product, all firms are price takers (they cannot control the market price of their product), all firms have relatively small market share, buyers have complete information about product and prices, and there is free entry and exit. In the case of the bike repair industry, bike repairs are the same regardless of who performs the repair. If I need a bike assembled, there are multiple places that will assemble the bike the same way that the shop down the street would. Most bike repair shops have to be price takers because if they set their price for their services higher than the market price then their customers will just go to another bike shop. Of course, unless there is only one bike-shop in a town, then they could have a better chance at being a price maker, but it all depends on the shops location. There can be a few barriers to entry in regard to opening a brick and mortar bike-repair shop (such as start up funds, licenses/permits, etc…) but that doesn't mean that you can’t repair bikes from your garage at home. So essentially, anyone can run a bike repair …show more content…

I am sure that some bike shops have already begun doing this and have been experiences benefits from branching out and reacting to the changes within the market. They should also start thinking futuristically and trying to predict possible changes within the market. We see this happening in many different markets. Huge book suppliers are putting local book stores out of business. The same goes for the record stores, it was only a matter of time before it happened to the bike shops. The convenience of receiving a product to service at home is the ultimate

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