The clothing industry is amongst the many monopolistically competitive industries. There are many clothing firms in the industry competing against each other while producing similar products. However, the firms in the industry earn competitive advantages by distinguishing their products through branding and advertisements (Davis and Özgür, 4). Product differentiation is one of the strategies commonly used by monopolistic competitive firms. Product differentiation in a clothing firm can involve designs, the quality of materials used, and the prices charged for the clothes. In advertisements, differentiation is put in physical aspects such as color, designs, elastic, and different sizes (Davis and Özgür, 7). Intangible aspects included in the clothing advertisement can be guaranteed money back, high quality, free delivery, and long-lasting usage.
Steel manufacturing is an example of an oligopolistic competitive industry. In such a market, a few steel manufacturing companies rule over other firms. The few firms are the price and trendsetters for other small companies and often form a partnership to operate successfully (Ritz 185). To distinguish themselves from their competitors, they improve their product quality, hike or lower prices, and advertise the special features of their products. In an oligopolistic market, if a leading company lowers prices, the others do not follow but rather improve their products to remain in the higher cuts of prices (Ritz 187). The few leading companies also stay competitive in the industry by setting their standards high to prevent easy entry into the industry. The firms set high standards by producing the highest quality products, selling them at a higher price, and producing them in high quantities (Ritz 189). That way, they ensure that the small or new companies fear the competition at the top thus ensuring reduced entry to the industry.
Works Cited
Davis, Leila, and Özgür Orhangazi. “Competition and Monopoly in the US Economy: What Do the Industrial Concentration Data Show?”Competition & Change, vol. 25, no.1, 2021, pp.3-30. Web.
Ritz, Robert A. “Oligopolistic Competition and Welfare.” Handbook of Game Theory and Industrial Organization, Volume I. Edited by Luis Corchón and Marco Marini, Edward Elgar Publishing, 2018, pp.181–200.