Product differentiation
What Product differentiation means in Economics A-Level, as defined for AQA.
Definitions of Product differentiation
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Reference: AQA
A source of monopoly power for firms in monopolistically competitive markets, allowing them to raise prices slightly without losing all customers.
The degree to which products differ, including branding, location, packaging and customer service as well as physical differences.
Producing differentiated products that are not perfect substitutes, which non-price competition is used to maintain.
Firms produce differentiated products, giving them price-making power and a downward-sloping demand curve.
The use of branding, advertising, and unique features to make goods appear distinct from competitors.
A high degree of it allows a firm to carve out a unique niche, making its goods less substitutable.
Topics that use Product differentiation
- Market structures (AQA A-Level)
- Monopolistic competition (AQA A-Level)
- Monopoly and monopoly power (AQA A-Level)
- Oligopoly (AQA A-Level)
Related terms
- Barriers to entry
- Market concentration
- Monopoly power
- Non-price competition
- Allocative inefficiency
- Barriers to entry and exit
- Cartel
- Cartels
Using Product differentiation in the exam
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