Grocery stores and gasoline stations in a large city would appear to be examples of competitive...

Question

Grocery stores and gasoline stations in a large city would appear to be examples of competitive markets: There are numerous relatively small sellers, each seller is a price-taker, and the products are quite similar.
a. How could we argue that these markets are notcompetitive?
b. Could each firm face a demand curve that is not perfectly elastic?
c. How profitable do you expect grocery stores and gasoline stations to be in the long run

Robert · Accepted Answer

Grocery stores and gasoline stations in a large city would appear to be examples of competitive markets: There are numerous relatively small sellers, each seller is a price-taker, and the products are quite similar.
a. How could we argue that these markets are not competitive?
Ina narrow sense each one is different in terms of the goods they stock, the customer service they provide and the convenience factor of a store. For a person who has option of two stores he will prefer the closer store even though both stores maybe identical in all aspects.  In this sense the distance factor renders all competition null.

Grocery stores and gasoline stations in a large city would appear to be examples of competitive markets: There are numerous relatively small sellers, each seller is a price-taker, and the products are...

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