How Does the Fishball Stall Market in Two Different Districts in Hong Kong, Causeway Bay and Shum Shui Po Demonstrate the Characteristics of Monopolistic Competition?

Topics: Monopolistic competition, Monopoly, Perfect competition Pages: 8 (2545 words) Published: November 6, 2008
This essay will be based around the collection of data on 8 different fish ball stalls around the two different areas of Hong Kong, Shum Shui Po and Causeway Bay. Using the data collected, I will analyze how the fishball stall market demonstrates the characteristics of monopolistic competition. By categorizing the type of market structure it belongs to, I can understand why the prices are the way they are and the possible developments for differentiating the product in the future.

The reason why I choose to do this is because I can look into this local issue myself and through primary sources, I can analyze a simplified real-life model of economic theory and see what holds true in the “real-world”. The locations were chosen because they were both drastically different areas of Hong Kong in terms of the income and social status of the people passing by there, but they both had sold a similar homogenous product that is popular around Hong Kong, thus providing me with a broad yet practical range of data.

The method of data collection would be mostly collecting the prices of the standard, more commonly sold version of the fishball product as well as the prices for the variations of it. Notes would be taken about the unique characteristics of the variations that might be trying to differentiate themselves as well as the environment that they are being sold at (ie Signs, hygiene, seating). After achieving the data, I should be able to see not only the effect of income elasticity between the rich and poor districts of Hong Kong and possibly the minor changes in price due to other factors. Knowing this, I can determine if the market is considered Monopolistic competition thus answering my main question.

If anomalies are found in the data, then perhaps the market might not belong to the monopolistic competition market structure and I can evaluate what factors play into the differentiation of a specific firm.

Market Research in Causeway Bay

As one of the city centers of Hong Kong, Causeway bay has one of the world’s busiest districts with heavier concentration of people than Shum Shui Po. There are plenty of brand name shops around these areas and thus the income of the people who are likely to shop in Causeway Bay should be around from middle to upper-class citizens. Due to the amount of traffic, the variable costs - the rent also costs more; second only to the Fifth Avenue in New York.(refer to Appendix 8-9) Therefore because the demand is higher in Causeway bay thus the producer should be more willing to supply more compared to Shum Shui Po, driving the equilibrium price to a new level. Due to it being known as a trendy spot, it is a common spot for young people to hang out and students are known to be the primary consumer for fishballs. All the stalls sell the same size and quantity(4) of fishballs.

Stall 1- This is a stall located right next to several computer cafes and fast food restaurants, they serve a variety of food and drinks.

Stall 2- This one specializes in the Sichuan fish balls that are famous for being the spiciest fish balls in Hong Kong. Due to the reputation of the stall, the prices are much higher. It is located right outside the Times Square theater entrance. The fishball also uses a higher proportion of fish as opposed to using a cheaper substitute-shark meat for a binder that most other stalls use and thus is more expensive.

Stall 3- Located near a number of brand name stores and the Sogo department stall. It sells a variety of foods but less than stall 1.

Stall 4- This stall is unique because there are seating arrangements, however the hygiene of the area is poor and is located quite some distance off a main road. Causeway BayStall 1Stall 2Stall 3Stall 4

Price in HK dollars61066

Causeway Bay district traffic-
(Picture taken from

Market Research in Shum Shui Po
Shum Shui Po is a lower...
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