Category: Imperfect Competition & Price Discrimination

Monopolistic Motives

2020

 

The Parks Department has arranged a gala to raise money for a new park on the old Sullivan Lot. If they can’t raise the money, the lot will be sold to build another Paunch Burger. Nothing has gone their way while organizing the gala, and Tom hasn’t been able to find a caterer who was willing to provide free food, but then he had an idea. Paunch Burger operates in a monopolistically competitive market, which means the introduction of another fast-food business would lead to decreased demand for other fast-food companies. Tom is then able to arrange other fast food companies to provide food since they have more to lose if a new restaurant opens.

See more: monopolistic competition, imperfect competition, demand, substitutes, incentives

Celebrity Sushi

2018

Tom and Donna are doing one last Treat Yo Self journey before Donna’s wedding. As the Butler of Honor, Tom takes Donna to eat at the hottest sushi restaurant in LA. All of the fish served has been previously owned by celebrities as a way to differentiate it from standard sushi.

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Beef Milk

2018

Donna and Tom are curious about what the newest fad is in Pawnee. Annabel Porter tells Ron, Donna, and Tom about milk with a flourish that makes it worth $60 a gallon instead of $3 a gallon. Ron isn’t fooled, he realizes it’s just milk.

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Star Power

2018

Gryzzl wants to bring in a celebrity to help distinguish the company so that they can win the bid. Tom and Donna list other instances where celebrity ownership or endorsement have helped companies. Celebrity endorsements may serve as a signalling device for companies.

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Types of Talks

2018

It’s time for some shop talk as Leslie and Ben sit down with Ben’s campaign manager to discuss their strategy going forward in Ben’s election. Leslie takes a brief moment to note that shop talk is one of her favorite types of talk and then goes on to list the other types. This is a cute (and quick) introduction to the concept of product differentiation, where companies sell similar products with different attributes. Product differentiation can allow a company to charge higher prices for their products if people perceive value in the differentiation.

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The Tent Mogul

2017

Ben and Tom aren’t happy with the high tent prices and add-ons at one tent rental shop, so they try to go to a competitor only to find that all of the tent rental places have the same owner who is happy to exploit his market power. While the owner tries to differentiate their product through branding, they have essentially monopolized central Indiana’s tent rental industry.

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Tommy’s Closet vs. Rent-A-Swag

2017

Tom gets an offer that someone is interested in buying his business. After some though, Tom chooses not to sell his clothing rental business and then finds out that the potential buyer will now try to drive him out of business by setting up across the street. Monopolistic competition allows for easy entry and exit into a market that is profitable and results in a reduction in long term profits. This is also a good example of the Hotelling Model where similar firms setup near each other to split the market.

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Tom the Entrepreneur

2017

Tom fancies himself an entrepreneur and lists off a variety of different business ideas he has. Throughout the series, Tom comes up with different business ideas, but this is just a subset of his ideas that he names during the premier of his alcoholic beverage, Snake Juice. Most of his ideas though are really just variances of other products so Tom is focusing on differentiating the businesses to serve niche markets.

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Soda Sizes

2017

Leslie meets with Kathryn Pinewood to discuss the sizes of sodas sold at the local restaurants. Leslie, as city council member, doesn’t believe that this move by local businesses is good for the health of her community. Local restaurants have gotten creative in marketing the larger sodas by offering price discounts when customers by large volumes. Despite framing the larger sizes with more normal names, Leslie is confused why people would keep purchasing that much soda.

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