Bookstores-+Keyan,+Farah+Winfred,+Suhaila,+Kimli

 Market structure of bookstores in Singapore is monopolistic competition consist of many competitive sellers i.e. Popular and 25 degree. There are no barriers to entry in the bookstore industry. Firms produce differentiated products which makes them able to raise its prices without losing its customers as they have a certain degree of market power, hence their demand curve is downward sloping. Each bookstore focuses on selling different types of books. eg. Popular mainly sells books for education, Borders for entertainment or hobbyists and Times also tend to focus on travellers.   Create brand loyalty through membership cards gives privileges like discounts off purchases in the bookstore or discounts off purchases from other companies# that partner with them, as well as, in the case of Popular, giving free copies of a magazine that offers 20% discounts. By promoting brand loyalty, demand is price inelastic and firms are able to increase their prices to earn greater total revenue.

Firms in the bookstores industry are involved in non-price competition through advertising to increase sales of their product. An example is that Popular updates Singaporeans about their sales through mass sms and persuade them in purchasing it through advertisement along social network sites like facebook. 

 Firms in the bookstore industry form partnerships with firms in other industries so that consumers will be able to enjoy special privileges formed from the partnership. For example, United Overseas Bank credit card members enjoys 10% discounts at Borders Bookstore. Consumers, who have UOB credit cards, will then be encouraged to purchase books in Borders.

Bookstores in Singapore engage in price competition. Since demand curve of bookstores are down-sloping and relatively price elastic due to the large number of sellers and little market power, lowering prices will increase the firm’s market share.For example, Popular bookstore gave a promotion on the book “Man named Dave” to make its price #to gain more revenue.

Popular in the short run are earning supernormal profits globally in the short run as they are currently achieving 75 percent increase in profits from $10.9 million to $19.1 million #.

In the long run, if existing bookstores are seen earning to earn super-normal profits in the short run(for example popular), new bookstores like san bookstore will be attracted into the bookstore industry.As these new firms enter the industry, they will take some customers away from existing firms like popular, times, borders. Each firm will result in having smaller market share and hence a smaller demand for their goods.The demand curve(AR) of the good will shift leftwards and become more elastic due to more substitutes existence when new bookstore firms enter the industry.Supernormal profits will be reduced. The leftward shift of the AR curve will continue until it is tangent to the LRAC curve and normal profits is made. Hence firms in the bookstore industry will make normal profits in the long run.Due to only normal profits being made, long run equilibrium will be achieved as normal profits do not attract new firms and existing firms will not shut down as they have enough revenue to continue production.