What is Monopolistic Competition?
The Pros and Cons
Monopolistic competition involves many firms competing against each other, but selling products that are distinctive in some way. Restaurants are a perfect example of monopolistic competition. They are all competing against each other with food, drinks and atmosphere, but their particular kind of food and drinks are distinctive and special in some way.
Some of us like Mexican food, while some of us would rather go to an Italian restaurant. There is Greek food, burgers, steaks and seafood specialties. Any kind of food you can think of, there is a restaurant out there that will make it for you. And each different restaurant has their own type of atmosphere as well. Some people might love to sit on the dock and watch the ocean, while someone else would rather be inside eating by candlelight.
Restaurants are lined up along the road side by side with signs and advertising designed to catch your attention, make your mouth water and cause you to turn into their parking lot. Red Lobster sits right beside Logan’s Steakhouse for example.
Japanese restaurants compete with Chinese restaurants, while a fast food McDonald’s sits right between them. My husband and I personally love to eat out. That is one thing we would do practically every weekend before COVID. During the coronavirus crisis it is probably one of the main things we have missed.
Benefits and pros of monopolistic competition include the facts that the mixture of food and style caters to all kinds of people from all walks of life. We can all find some kind of food that we like when we go out to eat. There are restaurants who serve alcohol and restaurants that do not. Everyone likes variety and I am sure that most of us are glad to have so many choices when it comes to eating out.
Detractions and cons of monopolistic competition include the facts that we have way too many choices. Sometimes as we are driving by tons of eating establishments, we struggle to choose what sounds good right at the moment.
This also highlights the problem that there is way too much competition. A smaller restaurant that has a really good niche in its type of food and style will struggle greatly to make their mark in the industry and get noticed. Larger food chains are just too hard to compete against.
We personally always try to eat at the small mom and pop restaurants as we travel through small towns. We have found some great places that have never been heard of, and we are always sure to comment on google about how great the food and service was in order to help them get some publicity. We also try to leave really good tips at these small hidden gems we find.
I am a big supporter of small-town business, and when this crisis is over it will be those local restaurant places that need our business and support the most.
