Monopolistic Competition


The car industry is an example of monopolistic competition. Each company within the market sell differing care and compete for market dominance, with Japanese, German, and American automakers mainly dominating the industry today. Factors that contribute to the monopolistic competition in the car market include that there are several firms within the market, and there are many automakers worldwide. Brands are able to distinguish themselves with quality and brand reputation. Because there are few barriers to join the industry, new producers often appear and old ones leave. Firms have control over the overall prices of their cars, but no companies hold complete dominance over the industry. There are several factors to consider when breaking apart a car, the first being reliability. It is important that the car will not break down in its first week of use. Another factor is style, with aesthetically pleasing cars garnering wider audiences who want to look better. The final factor is price, with consumers purchasing the best price package. Also important is how advertising is used to promote products.

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