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
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.
See more: advertising, celebrity endorsement, monopolistic competition, product differentiation
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.
See more: advertising, demand shifts, monopolistic competition, preferences, product differentiation
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.
See more: advertising, celebrity endorsement, monopolistic competition, product differentiation, signalling
Leslie tries obtaining a large parcel of local land to build a park in honor of the history of Pawnee. When the group arrives at JJ’s Diner, they learn that the diner will be shutting down because of a new owner. Leslie discusses the growth that Pawnee has been experiencing, but laments the loss of some of Pawnee’s charm.
See more: development, gentrification, growth, monopolistic competition, standard of living
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.
See more: branding, horizontal mergers, market power, market structures, marketing, monopolistic competition, monopoly, product differentiation
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.
See more: barriers to entry, demand shifts, duopoly, free lunch, hotelling model, imperfect competition, invisible hand, marketing, mergers, monopolistic competition, NSTAFL, product differentiation, supply shifts, zero profit
Tom pranked Anne by putting glitter in her laundry detergent and she decides to return the favor by putting glitter in Tom’s moisturizer. She pitches it as a new product gimmick, but Tom supports the idea of this new product, “Sparkle Skin.”
See more: entrepreneurship, monopolistic competition, product differentiation
Ron won’t endorse a product unless he uses it exclusively and actually believe in it. Firms in imperfect markets often use celebrity advertising because it serves as a signal that the person selling the product actually believes in the product.
See more: advertising, monopolistic competition, product differentiation