Examples of monopolistic competition can be found all over the planet.
But what exactly is monopolistic competition? Monopolistic competition is a model of market structure which allows for competitors that all provide products that can be differentiated from each other. Therefore, each competitive producer has products that have differences from their competition and are not perfect substitutes for the other competitor’s product. They differentiate their product through physical differences, branding differences, and distribution differences.
In monopolistic competition, no one business has complete control over market prices; however, all producers have some control over the price. These companies within a monopolistic competition tend to set their own prices without concern of how this impacts other companies. Some easy examples of monopolistic competition are hotels and restaurants — these industries are competing for the similar customer bases, but their final product can be differentiated from each other. Also, entry and exit barriers in the market are generally low for monopolistic competition.
Now that you have the proper background knowledge, here are the more prominent examples of monopolistic competition around the globe:
Monopolistic Competition Examples That Originated in the United States
The tech industry, specifically in relation to the production of specific devices, is an example of monopolistic competition. Smartphones are differentiated by brand, operating system, technical specs, and physical features. Each company that creates smartphones may have differentiations in their products, but they are still competing for the same consumer base.
Microsoft’s entrance into the smartphone realm is the Windows Phone. The Windows Phone has been fairly unsuccessful compared to competitors; however, its creation of the Nokia Lumia series has been the most successful to date — accounting for 83.3% of Windows Phone sales.
Google’s smartphone system is Android, and Android is the product to beat when it comes to smartphone operating systems, outselling Windows, iOS, and OS X. It is the most popular smartphone operating system globally, claiming 53% of all devices.
Apple’s iPhone is one of the most recognizable brands in the smartphone sphere. Of all of these examples of monopolistic competition, Apple is perhaps the most obvious.
Although outsold by Android, the iPhone and the iOS operating system garners a hugely loyal customer base that comes back for each new iteration of the product. The iPhone changed the way smartphones were made and consistently makes Apple a dominant player, even if they are second place in market share.
Video Streaming Services
From Netflix to Hulu, video streaming services have quickly become a monopolistic competition market. Each of these companies offers a streaming service, but each service has differences in programming, price, and distinct branding. Also, each streaming service listed here has forayed into creating their own original programming as well as providing a space to catch up on cable broadcast shows and released movies.
As of 2016, Netflix has around 70 million subscribers. While it is the undisputed leader of online video streaming, competitors like Amazon Prime and Hulu are making extensive efforts to compete, outbidding Netflix for show rights while Netflix’s catalog slims down. However, starting in September of 2016, Netflix will hold exclusive streaming rights to all films Disney, Marvel, Lucasfilm, and Pixar.
Amazon Prime Video is Amazon’s streaming service that comes as one of the perks to the Amazon Prime membership or can be purchased separately from the overall membership for $8.99 per month. If you are not interested in a Prime membership or monthly fee, you can still stream shows and movies for individual pricing through Amazon.
Hulu is a joint venture between Disney, 21st Century Fox, and Time Warner. Their take on streaming services is quite different from that of Amazon or Netflix, specifically in the way they include advertisements in their streaming services. Hulu not only allows some content for free, but it also gets TV content directly after airing, unlike its counterparts that offer complete seasons after they have aired. Although still well behind Netflix, Hulu passed the 12 million subscriber mark in May 2016.
Monopolistic Competition Examples That Originated in the United Kingdom
Taxis and Private Hire Vehicle Industry
Taxi and private hire vehicles are a large industry in the UK; however, nearly 80% of the taxis in the UK are smaller owner-operator businesses. All of these businesses are competing for the same customers, but they all offer a different experience from the way you book a car to the luxury of the experience.
Addison Lee is a private hire vehicle company based in London. The company operates a fleet of 4,000 vehicles with annual revenues of over £200 million. This company has become a fierce competitor with the London black cabs and carries around 10 million passengers each year.
London Black Cabs
In London, driving a black cab is a privilege that only few are able to achieve. It requires passing “The Knowledge” that tests a drivers ability to get anywhere in and around London without consulting a GPS or map. There are over 23,000 drivers of black cabs, and the competition from private hire companies and mobile apps like Uber have created a stir in the market.
Although Uber didn’t originate in the UK, its effects on this market are much more pronounced than its US counterparts. In many ways, the emergence of Uber has threatened the pride and difficulty associated with becoming a black cab driver in the UK. What was once a difficult process now becomes as easy as downloading an app and registering. It does create interesting competition between the traditional hailing of a cab to the use of your smartphone to arrange your ride.
Monopolistic Competition Examples That Originated in Canada
Telus, Rogers, and Bell are three mobile networks that lead in this market in Canada. All three provide similar services, but have differentiations when it comes to service capabilities. The Big Three mobile networks end up stifling other smaller competition, and since they offer different features and plans while competing for similar customer base, they are considered a monopolistic competition.
As of 2013, Telus held about 28% of the market share in Canada for mobile networks. Over the past 10 years, the company has been accused of attempting to squash emerging competition in Canadian telecommunications.
Rogers is considered Canada’s largest wireless carrier with over 10 million subscribers as of the third quarter of 2015.
Bell is considered to be the best performing wireless carrier in Canada based upon recent studies. Recently, Bell has petitioned the Federal Cabinet to ensure its monopoly on fiber-to-the-home facilities. If they win, Bell will be able to raise prices on what is now considered a necessary utility.
Monopolistic Competition Examples That Originated in Asia
Budget Air Services
In Thailand, three budget airline services compete directly with one another by offering similar services that differentiate by location, pricing, and brand. This budget airline sector is extremely important to Thailand’s economy by providing low costs to business travelers and fueling the tourism industry.
Nok Air operates more than 20 aircrafts in 2016. They recently released a new slogan, “Smiling Across Asia,” which points to their strategy to become the premiere regional carrier for Asia. This comes at a point when the company has been struggling in 2016 with internal issues with pilot staffing.
Orient Thai Airlines
Formerly One-Two-Go Airlines, Orient Thai Airlines has 20 aircrafts operating in 2016. They are the only Thai airlines to have the royal seal, which is made possible by the owner’s relationship with the King of Thailand. This airline service only has destinations in China and Thailand.
Thai Air Asia
Thai Air Asia has a total of 66 aircraft in its fleet, which makes it the largest of these three budget carriers. This carrier was the second best airline for flights arriving on-time, with approximately 96.08% of flights arriving on-time.
Examples of Monopolistic Competition: Final Thoughts
In our world, monopolistic competition is all around us, even if you didn’t realize it before! Our goal was to give you clarity on monopolistic competition and show you examples on how this exists on a real-world level. Remember, to be monopolistic competition there must be competitors that offer a product that can be differentiated by brand, physicality, or distribution. The products are similar in nature, but offer nuanced differences from each other. Ultimately, monopolistic competition creates diversity and choice for the consumer within markets. From smartphone producers to budget airlines, monopolistic competition is present in markets all over the world.