What is Monopolistic Competition?


Yes Google’s dominance is GOOD for the consumer!

Allow me to explain this seemingly contradictory yet true paradox!


In the western world the most common type of market structure is Monopolistic Competition. Monopolistic competition is not a Monopoly!

Monopolistic Competition is when competing firms differentiate their products one from another on everything other than PRICE.

This often leads to big players sharing the market which can be viewed as a form of collusion; leading to greater profits for participants but only at the expense of the consumer. The result is prices are kept well above what would be expected in a ‘Perfect Competition’ market structure.

With product differentiation being the standard marketing practice, certain successful firms have been forced to compete more aggressively as a result of factors including Google (and the internet)! >:) (Evil Grin)


Is Google’s search market dominance good or evil?

With Google (GOOG) being the only effective gateway to the world wide web market; monopolistic companies are teaming up against GOOG in an effort to try and avoide competition by refusing to compete on the same platform.

US Google Market Share UK Google Market Share

An attempt split the search market based on differentiating factors such as aesthetics would set up a demographic where ‘monopolistic companies’ could use Google Adwords to reach IT savvy individuals while the second search engine could be used as a means of reaching the other (default) consumer. With a definite split in the search market, competing firms would have a greater opportunity to operate under a form of imperfect competition.

The whole Google model has been about speed, technology and competition. Now while this may work for GOOG (10 years ahead of its competitors) it may not be an appealing scenario for other less innovative mega firms which may be selling more homogeneous (standard) products. In such cases, sale targets are reached by influencing consumer decisions through non-price competition advertising (often highlighting aesthetics and subtle product differentiation) and only targeting their specific market demographic more suited to their market share.

Google Market Share - Australia

Google places the world’s information at the fingertips of the average consumer and a split in the search market will mean less competition.

The bottom line being that Google’s quest to drive the Worlds Information to the average consumer is now hurting monopolistic companies as consumers have access to more information today than the head of CIA had 20 years back. People are no longer moved by advertising alone but require retailers to prove their worth as we ‘Google’ the world for reviews, alternatives, social opinions, price comparisons and even taking into account currency exchange rates while shopping internationally. This vast spectrum of second opinions has placed Google on the side of the average consumer at the expense of the worn out Goliaths. The sad thing is if Google loses the war with ‘monopolistic competition’ on legal grounds that Google itself is a ‘monopoly’ – it is the consumer who will eventually pay for it.

Google Price Comparison Search Screenshot

Recent questions raised by the European Commission regarding Google’s search functions and how its advertising is sold should concern the consumer with its clear anti-trust overtones. While I believe governments should regulate big business which would include banks, telecommunication companies, big manufacturers, software and internet giants like Google the question I would like to raise is “Why did they miss the big picture?” Why hasn’t the government noticed the GOOD that the highly competitive Google model has done to our world and competition in general?

GOOG stands for GOOD!


by Haggle Shopping

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