§ 01
| Perfect Competition | Monopolistic Competition | Monopoly | |
|---|---|---|---|
| Products | Identical | Similar but differentiated | Unique, no substitutes |
| Pricing power | None | Some (brand premium) | High |
| Barriers to entry | None | Low-moderate (brand building) | Very high |
| Long-run profits | Zero | Modest | Above-average |
§ 02
Brand value is the key differentiator. Nike sells sneakers (commodity) but commands a premium because of brand perception. The brand itself is the moat.
§ 03
Compare two companies in the same industry. The one with higher margins likely has stronger brand differentiation.
§ 04
§ 05
Company A sells a commodity product but has invested heavily in brand (Coca-Cola vs. generic cola). Company B sells the same commodity product with no brand premium. What should A's gross margin look like relative to B?
Five questions · AI feedback
Sit with the ideas.
Two athletic shoe companies: Brand X is iconic with celebrity endorsements and trades at 30x earnings. Brand Y makes similar quality shoes but with no brand recognition and trades at 12x earnings. Why the valuation gap?
Why: