Wendy’s — Choice is Good

This Wendy’s commercial picks fun at Soviet economics that were notorious for limiting options available to consumers in the name of efficiency, but monopolistic competition in a capital market thrives on product differentiation and the ability to cater to people’s preferences.

Thanks to Rob Szarka for the find!

Seinfeld — Soup Nazi

 

Superior products can provide companies with a short term barrier to entry in a market, but they aren’t usually long lasting. Beyond technological superiority, some companies may have service or quality superiority, as is the case with the Soup Nazi in Seinfeld. Offering a superior product allows the owner to treat customers rudely, offer high prices, and restrict output as he desires.

This clip is available thanks to Economics of Seinfeld.

Hawaii 5-0 — Product Differentiation

 

In monopolistically competitive markets, sellers offer differentiated products, and this Hawaiian food truck is no different. While some people believe that food trucks should only offer a small range of menus, the chef argues that in order to stand out in such a competitive market that he has to offer variety. Introducing new substitutes will decrease the demand for others and eventually lead to zero economic profit.

Thanks to Hannah Canil for the clip suggestion!

South Park — White People Flipping Houses

 

Randy Marsh is a local contractor who flips homes in the area. His TV show, white people flipping homes, has come under bad wrap when local Confederates have decided to use his television show to protest the Amazon Echo stealing jobs in the town. Marsh takes the men to court for damages because viewers negatively associate the local Confederates with the show. He’s asked why he doesn’t change the name of his show, but he lists off a variety of other show titles that were already taken. In a monopolistically competitive market, product differentiation is essential to creating demand. Items must be substitutable, but sellers also must try to convince buyers that their product is somehow unique from the competition.

Saturday Night Life — Toys ‘R Us

When teaching students about the different types of firm structures, we always discuss monopolistic competition and how firms try to differentiate their products to get positive economic profits. This short clip shows how Toys R Us is staying open for 87 hours straight to differentiate itself from other toy stores around the holiday season.

Thanks to James Tierney for the clip and description.

Superior Donuts — Food Truck Competition

A new food truck sets up shop outside the donut store. The clip starts with the new owner coming by and asking how long the shop has been in business and what kind of customers stop by. She quickly realizes that she can setup shop and steal some of the existing customers. This clip does a really good job showing how monopolistically competitive markets function and that even though an imperfect substitute enters the market, the demand for one business decreases.

 

MedicoreFilms — Free Hugs

My students favorite clip when discussing product differentiation is this clip from MedicoreFilms where a guy offers Deluxe Hugs for $2 more. One of his opening lines best illustrates the concept of monopolistic competition:

Deluxe guy: How’s businesses?

Free guy: Mine are free, this isn’t a business.

Deluxe guy: Different people want different stuff, so it’s cool.

Businesses can differentiate their products by quality, style, location, etc. The guy offering deluxe hugs is trying to fill a portion of the market from people willing to pay more for “better” hugs.

John Stossel — The Fight Against Food Trucks

John Stossel, through ReasonTV, looks at the regulations behind the food truck industry. From a competitive market standpoint, food trucks have the ability to respond to high demand areas by relocating at any given moment. For brick-and-mortar businesses, however, food trucks enter the market as a low-cost competitor and steal customers from permanent restaurants. Many cities in the United States have setup regulation limiting the location of food trucks or the hours they may operate. This rent seeking behavior, however, limits the amount of options available to consumers in the name of “fairness.”

Always Sunny: One Rock

Dennis and Dee are trying to buy a crack rock in order to manipulate the welfare system, but they aren’t really sure of the cost of a crack rock. When they approach a street dealer, he quickly realizes that the two clients aren’t well informed and he can earn a bit of extra profit by charging them a higher price. Luckily for him, they agree.

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