ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Although any company can use a non-price competition strategy, it is most common among oligopolies and monopolistic competition, because firms can be extremely competitive.

Detailed explanation-2: -The firms within monopolistic and oligopoly market compete in non-price competition as “the differentiated goods” is one of the main features of both the markets.

Detailed explanation-3: -Non-price competition refers to the efforts on the part of a monopolistic competitive firm to increase its sales and profits through product variation and selling expenses instead of a cut in the price of its product.

Detailed explanation-4: -One of the characteristics of a monopolistic competitive market is that each firm must differentiate its products. Two ways to do this is through advertising and cultivating a brand. Advertising is a form of communication meant to inform, educate, and influence potential customers about products and services.

Detailed explanation-5: -When competing, oligopolists prefer non-price competition in order to avoid price wars. A price reduction may achieve strategic benefits, such as gaining market share, or deterring entry, but the danger is that rivals will simply reduce their prices in response.