Characteristics of Competition and Price

Characteristics of Competition and PriceMONOPOLISTIC competitorMonopolistic competition is the mart structure in which in that location is keen competition, but neither sodding(a) nor pure, among great(p) number producer or supplier. Monopolistic competition is the mixture of perfect competition and a certain degree of monopoly. Monopolistic competition lies between two extreme points perfect competition and monopoly.Characteristics of monopolistic competitionlarge no of sellerProduct differentiation it is the distinguish feature of monopolistic competition, that harvest-home of each seller is branded and identified.A firm has limited degree of control over the market place as relatively small percentage of total market is shared by the individual firm.large number of buyersthere is free entry of firmstwo dimensional competition expense competitionnon- price competitionnegative sloping acquire curve firms demand curve (or AR curve) slopes downward to sort outPrice competi tionPrice competition occurs when firms compete by selling identical or comparable harvest-tide. Seller compete each other on the basis of lowering the price. Price competition happens in the first place in three types of market monopolistic, duopoly oligopoly. The other two types of market does not compete with price because in monopoly the firm is equal to industry hence it decides the price of produce where as in perfect competition the price is decided by the market and an individual cannot require the price of the product.Price tensileity of demand in different market with respect to marketMonopolistic market the demand elasticity in monopolistic competition is highly elastic in long run. Because a slight metamorphose in price may change the demand of product in long run.Oligopoly there are totally few sellers in the market which does not affect the market. Therefore the elasticity of demand is relative elastic in this type of market.Duopoly there are only two sellers in the market which does not affect much of demand therefore the demand is relative elastic.CROSS PRICE ELASTICITY OF DEMAND fool price elasticity measure the responsiveness in the quantity demanded of one good to change in the price of another good.Substitute has positive cross price elasticity. It exist in monopoly, duopoly and oligopoly as the product are close substitute to each other in the market and there is slight change in the price of the product will increase the price for another product.NON PRICE COMPETITION non-price competition depends on making a product different from those of competitors and by giving it distinctive qualities that are treasured by the target HE market. These might include branding, styling, special features or higher aims of customer service. such factors can allow a premium price to be charged while still pass target customers Competitive value-for-money.the firms are engage in non price competition, the most prominent form beingness adverti sing.The market which is affected by non price factors is monopolistic competition and oligopoly. This happens because most firms are engaged in non price competition in spite of the additional cost involved, because non price factors usually more useful than selling for a lower price and avoid the risk of a price war.NON PRICE constituent AFFECTING DEMANDIncome of the consumerPrice of related goodsChange in taste of consumerThe expectation of buyer may changeChange in the number of buyer.NON PRICE FACTOR AFFECTING SUPPLYChange in the input costChange in the technologyChange in expectation of consumerChange in the number of seller.NON PRICE COMPETITION AND ITS EXISTANCEPERFECT COMPETITION all the products are homogenous in personality there is no point of non-price competition as it will not make a difference.MONOPOLY there is only one producer in monopolistic competition hence the concept of non-price competition does not apply.In Monopolistic competition oligopoly non-price competition is applicable.Product differentiation a situation where a producer or firm tries to win over the market or increase its market share by adding certain features to the product so that it croaks different form the other products.Features of product differentiation.Technical archetypes-this refer to the human face s to how advance is the product in terms of the current state of technology. For example if youre purchasing PC then this point would play a very vital role in the consideration.Quality standards- this refers to the theatrical role of raw material used in the product whether it be related to the manufacturing r the assembling if the product, as this directly effects the durability if the product and therefore its usefulness and life. Therefore the quality of the product plays a very important role in non-price competition.Design standards-it refers to the overall structure of the product that is provided in the market by a customer. This can play a vital role in attracting the customers. As the product provided has to be aesthetically good. Thus the producers can try and make a better design standard of their product.Service standards-this point generally refers to the after services given to the customers after the purchase has been made them and thus if the after sales provided to a customer is good by any company then the level of satisfaction also will be high.Advantages of non-price competitionThe quality of the product is in focus which helps companies to become unique and diffentiate from other equalize companies.The design and distinguishing features of goods and services offered in the marketplace matches the demand and needs of the plurality in that area.The location of distribution for targeted customers is given importance. Goods reach buyers matching their own convenience and needs.Offers innovation same(p) on-line shopping. Good for people that just stop during meals and sleepMarketers think out of the box in order to at tract customers to be interested in what they are offering instead of their competitor.Types of product differentiationVertical product differentiation- this can be defined as where a product differs from the product that its rival firm produces in terms of quality.Horizontal product differentiation- this can be defined as when a product differs from the rivals products, although the quality of the product seems to be of the similar nature.