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Colgate-Palmolive
Monopolistic Competition...

Description

Colgate-Palmolive Monopolistic Competition Monopolistic is a mixture of monopoly and perfect competition which are the complicated cases in the market structure. It is also a market structure in which there are large numbers of sellers selling differentiated products but these are close substitutes products and have easy entry and exit from the mark. (1) It characterized by a relatively large number of sellers (2) Has differentiated products and has many close substitutes (3) It is freedom to entry and exit from the industry Large Numbers Of Sellers There is a large number of sellers under the monopolistic competition and no individual firm can influence the market price. DIFFERENTIATED PRODUCTS Product differentiated could be through packaging, design, labeling, advertising and brand name. Due to the differentiated of their product, Toothpaste Company has to advertise their product so that their consumers will know more of that product itself.

FREE OF ENTRY AND EXIT INTO THE MARKET:

Many toothpaste companies have no barriers to entry. This will lead to intense competition in the market because many toothpaste companies are competing with each other monopolistic company which is Colgate the demand above shows that the curve is downward sloping due to product differentiation. The firm in monopolistic firm is small compared to the overall industry which has many firms. Each firm produces with close substitutes therefore the elasticity of demand for the product is quite high. The diagram above shows the curve for. Based on the graph where production at the Marginal Revenue (MR) =Marginal cost MC) output. If Colgate Company remains as a perfect competition in the industry it will make a supernormal profit.

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With numerous firms in an n industry, there are many brands of toothpaste i n the market. For example: DARLIE, SENSODYYNE, AQUAFRESH, CREST and others. Each of the firm ms produce similar but slightly different produ uct. The toothpaste industry turns out variation off product which is differentiated by texture, flavor, services, promotion, product attribute, bbrand names and packaging. Since there are many firms in a monopolistic competition industr y, firms will utilize promotional tools such as advertisements to encourage and influence peoplee to purchase their product. For example, COLGATE company are doing some promotion to attract more customer to seek the maximize profit. They are trying to create some clever advertisem ments for example, and adult and put in effort to promote bettter children’s oral COLGATE has targeting in children c hygiene and dental care.

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The COLGATE is only the ssmall part of total industry in monopolistic compeetition. Therefore, mited power to control over the market price of total industry. If the COLGATE brand firm has lim price of toothpaste rises, will results consumers switching to other br and. Although in monopolistic competition, there is price maker but the Colgate firm cannot set the price too ple can’t afford the cost of goods with higher price . higher, because other peop

Unlike monopolists and oligopolists, firms in monopolistic can’t maintain excess profit because consumers still have many substitutes to choose. n long -run. **Due to easy entry and exit from tthe industry, so the firms make only normal profit in...