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Differences in Advertising Between Competition and Oligopoly

1. Consider some of the products that are widely advertised on television. By what kind of firm is each produced a perfectly competitive firm, an oligopolistic firm, or another type of firm? How many major products can you think of that are not advertised on TV?

2. In what ways may the small retail sellers of the following products differentiate their goods from those of their rivals to make themselves monopolistic competitors: hamburgers, radios, cosmetics?

Solution Preview

1. Most TV advertising is done by oligopolistic firms. They produce differentiated goods and services such as cars, banking services, restaurant meals, packaged food, travel services, electronics, ...

Solution Summary

This solution explains why products sold by oligopolists and monopolistic competitors are advertised on television, but those produced by perfect competitors are not. It also gives examples of how monopolistic competitors could differentiate their products from their competitors.

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