Retailing under Monopolistic Competition: A Comparative Analysis

The paper presents extensive research on the analysis of the monopolistic competition model altered by adding vertical market interaction with several manufacturers, a retailer and consumers. The analysis of different types of interaction of market participants is given. The characteristic of these situations is presented in terms of the retailer's and manufacturers' profits, special attention is also paid to the consumer surplus function. The comparison of different types of interaction allows us to identify their strengths and weaknesses, and reveals the various possibilities of maintaining the balance. For each situation under consideration, detailed solutions are provided, and ways to further improve the model are proposed.