Hermela Berhe
Microeconomic Project 4
Dr. Gary Lunkenheimer
April 14, 2021
Description of the product Market
BIC is a family-owned company that is a market leader in stationery, lighters, shavers,
and branded goods. It is listed on the Paris Stock Exchange. My specific product is a crystal
ballpoint pen that consists of three main materials: plastic, metal, and ink. The majority of the
pen is plastic, and this is where most of the externalized costs come from. As mentioned in a
different part of the product analysis paper, Bic products are sold in 4 million retail outlets
worldwide, including grocery stores, mass merchandisers and stationery stores. This specific
product exists in a highly competitive market also known as a monopolistically competitive
market. A monopolistically competitive market is characterized by an industry in which
many firms offer products or services that are similar, but not perfect substitutes. This means
there are a lot of companies that offer products ,which is close to similar but not exactly the
same, to the market. In the case of my product, there are different brands that offer close but
not exactly similar forms of product such as;Paper Mate,Pentel, Pilot G-2, etc. All these
brands are made by different parent companies such as Newell Brands ,Mitsubishi Pen and
Pencil Company, and Pilot Co respectively, in which Société Bic is also the parent company
for the Bic cristal ballpoint pen. Even though there are many more producers of ballpoint
pens the most competitive ones are the above two companies I mentioned, Pilot G-2 being the
most dominant one in this market. These show that there are a lot more substitutes for my
product and that will be one of the reasons for the brand to have a slight effect on the market
if there is a change in price.
The price elasticity and also brand loyalty of customers play a role in differentiating
which market model the product belongs to. In my first product analysis paper, the calculated
data based on the survey shows that the product is elastic. As mentioned above this product
has a number of substitutes that are produced within the parent company and other companies
mentioned above, which proves that it has a number of substitutes and that means it is elastic.
Secondly, the brand loyalty people had to this specific brand was low. This implies if the
price of the products rise, customers will potentially adjust to another brand because it is
more affordable for them and offers almost the same quality, maybe even better.
In addition to the factors mentioned above, the other components that determine that
this product is in a monopolistically competitive market are the pricing and entry and exit
point. A monopolistic competitive market is one with freedom of entry and exit, but firms can
differentiate their products. Therefore, They are price makers for the reason that goods are
highly differentiated. In a monopolistically competitive market, barriers to entry and exit are
low, and the decisions of any one firm do not directly affect those of its competitors. They
exert some control over price, but because their products are similar, when one company
lowers prices, the others follow. As mentioned above in a competitive market, the barriers to
enter or exit a market are low. However, in the long-run equilibrium, it would impact its
decision because when a product decides to exit the market it is losing all revenue and saving
all costs so in order to decide that the product should have less revenue compared to the cost
to finally decide that. So in terms of my product, even though it has a free will to exit the
market at any time, the company has to think about if the revenue is greater or smaller if it
enters or exits a market.
In conclusion, the Bic brand exists in a monopolistically competitive market that has a
high number of competitors companies and brands. It also has a high number of sellers such
as Woods market, Walmart and many other online websites that provide this specific product.
On top of that, the product is elastic and this was proven by the previous three project
analysis. The elasticity of the product was determined by the high number of substitutes and
also the demand elasticity in monopolistic competition is highly elastic in the long run.
Because a slight change in price may change the demand of a product in the long run which
we discussed in class. Based on that information the brand doesn’t impact the market price
that much because of the high number of buyers and sellers.
REFERENCE
BIC Corporation - Company Profile, Information, Business Description, History, Background
Information on BIC Corporation. Reference for Business. (n.d.).
https://www.referenceforbusiness.com/history2/48/BIC-Corporation.html.
FAQ. BicWorld. (n.d.). https://us.bicworld.com/faq.
Gottheil, F. M. (1999). Principle of economics. Place of publication not identified: Cengage
Learning.
Says, C., Corpely.com, Says, M., Manma, Says, A., Anjali, . . . Get Econhelp. (2020, March
25). 5 types of market structures in economics (with examples). Retrieved April 12, 2021,
from https://www.googlesir.com/types-of-market-structures-and-examples/