What Are The Advantages And Disadvantages Of Monopolistic Competition?


6 Answers

Connor Sephton Profile
Connor Sephton answered
The advantages of monopolistic competition tend to be advantages for corporations, rather than advantages for consumers. After all, the whole concept of monopoly is about domination by one type of company. In the case of monopoly, a certain company will basically ride roughshod over smaller players in a particular field of industry.

  • Disadvantages

The disadvantage of monopolistic competition is that consumers only really have one choice about what to buy in a specific field of industry, since the field is totally dominated by the goods and services of one company. Therefore, pricing and the availability of merchandise is totally at the discretion of the company in charge. Often, when there is no monopoly present, there is more opportunity to try different products and services at a wide range of price points. After all, smaller companies may use cheaper pricing and superior quality to gouge out market share from their larger competitors. Unless you're the CEO of a monopolistic corporation, there may not be a lot of advantages to a true monopoly system, because it always favors powerful companies, rather than ordinary buyers.

  • How to learn more

The study of economics is all about understanding different types of systems of competition and how they help to define the overall marketplace. For example, in some cultures and governments, communism or socialism may hinder the creation of true monopolies - however, these systems have serious drawbacks and pitfalls of their own. Understanding the economics of different competition systems can be very educational, and it can contribute to a much deeper understanding of monopolistic competition.

A monopoly is really excessive control over one specific segment or subtype of industry. In the USA, and in many other countries, there are laws against monopoly, because companies that run monopolies tend to be very ruthless with smaller competitors.
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Anonymous commented
There is a HUGE difference between Monopolistic Competition and Pure Monopoly. You are describing a pure monopoly not a monopolistic competition.
Ellie Hoe Profile
Ellie Hoe answered
The major disadvantage of a monopolistic competition is that competing firms are inefficient and the prices of the products usually exceed the benefits or value provided by the products or services. Government lacks the control because market is huge and a large number of buyers and sellers exist. Monopolistic competition emphasize on the advertisements and promotional strategies which induces the customers to spend more because of the brand names. Moreover, there is no regulatory control over the prices therefore, consumers suffer in a monopolistic competition.
Anonymous Profile
Anonymous answered
Advantages of monopolistic
Anonymous Profile
Anonymous answered
This mechanism offer variety of goods, high quality of products and lower prices to consumers.
Anonymous Profile
Anonymous answered
No offence ellie82, but that is incorrect. I have an economics book with me, and it says that monopolistic competition doesnt no emphasize on the advertisements and promotional strategies.

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