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Analyzing the Monopolistic Competition of the Retail Industry

Understanding the Terms

Symbol = a code comprised of letters used as a unique identification of the stock 52 week High = the highest price reached during the last 52 weeks 52 week Low = the lowest price reached during the last 52 weeks Dividend = taxable payment declared by a company's board of directors & given to its shareholders out of the company's current/retained earnings

Dividend Yield = yield a company pays its shareholders in the form of dividends; calculated by the amount of dividends paid per share over the course of the year divided by the stock price

P/E Ratio = (aka the price earnings ratio) most common measure of how pricey the stock is; equivalent to a stock's market capitalization divided by its post tax earnings over a year's period

Defining the Market

The retail industry is comprised of thousands of different brands and companies. However each is defined by its quality of make and materials used. Abercrombie & Fitch, Timberland, and Guess are all well-known and respected brand names. However if prices were to exceed what people are willing to pay, then the consumers would alter their preferences and buy from another brand. Therefore we are dealing with a monopolistic competition. ( Monopolistic competition: a common form of the industry structure characterized by a large number of firms, none of which can influence market price by virtue of size alone; some degree of market power is achieved by firms producing differentiated products. New firms can enter and established firms can exit with ease )

I. "common form of the industry structure characterized by a large number of firms none of which can influence market price by virtue of size alone … New firms can enter and established firms can exit with ease."

Every year hundreds of new designers emerge into the retail industry. No matter what one's style of clothing, there...
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