Question

Which of the four forms of market/industry competition have advertising?

Why is advertising experienced in this/these form(s) of competition and not experienced in the other form(s) of competition?

Answer 1

The firms in the monopolistically competitive market use advertisement.

Some firms in oligopoly market also use advertisement.

The other forms of market do not use advertisement.

This is because there are small number of firms in the monopolistically competitive market that compete against each other in order to to gain market control. They do this so that they can make product differentiation and have market control, so that they can charge higher price or they can sell a higher quantity of goods than other competitors.

The firms in oligopoly sometimes use advertisement in order to increase their market share. They use advertisement in order to promote any product that has newly arrived.

In other forms of market no advertisement is seen.

Consider the case of perfect competition where firms sell identical products at the given market price and they do not have any control over the market. So they can sell the quantity depending on their own cost structure and price is given by the market.

In a Monopoly market the firm is the only producer of the good, so so it has no competitor and therefore no need of advertisement.