Question 1. What is the type of market structure for fashion clothing?
Market structures are divided into perfect markets and imperfect markets which include monopoly, oligopoly, and monopolistic competition (Adlakha, Johari, and Weintraub, 2015, 280). The fashion clothing is categorized as a monopolistic competitive market structure. It is characterized by the following;
a. There are many sellers and many buyers. In a monopolistic competitive market structure, there are many competing firms and many consumers in the market (Malerba, Nelson, Orsenigo, and Winter, 2007, 392). Consumers tend to perceive that there are no price differences in the market.
b. Products are differentiated. The fashion clothing is characterized by products which are not identical (Besanko, and Wu, 2013, 168). Products sold in the market have distinctive features, and consumers differentiate products regarding designs, packaging, and material used.
c. The firms face a downward demand curve. In the fashion clothing, firms face a downward sloping demand curve implying that more quantity is demanded at lower prices and low quantity of fashion clothes is demanded at a high price (Teather, and Wood, 2010). For a firm to sell more, it must reduce its price.
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