Question

The textile industry in Pakistan is growing over the time due to the modernization, high standards of living and increasing demand for good material at reasonable price. Many fabric brands like as Gul Ahmed, Sana Safinaz, Warda, Nadia Hussain, Firdous Lawn, Bareeze Lawn, Khaadi, Kayseria, Nishat and many others jointly make the textile industry in Pakistan. As there are more than 50 top fabric brands in Pakistan which are concerned with design, production and distribution of yarn, cloth and clothing but in the face of this high competition, Khaadi is efficacious enough to capture the enormous market share and profit. It has specialized in hand-woven products and other textiles. It has 45 branches working across Pakistan. Estimated annual revenue of Khaadi is 100 Million $.

Being a student of economics, you’re required to identify the market structure category in which this Khaadi brand falls. Justify your answer by applying any two key characteristics of that market structure on the given industry.

Answer 1

The correct answer is, Oligopoly.

Step-by-step explanation:

This is so true that in Pakistan, the textile industry has grown at a much bigger pace in the past recent years. There are many brands that are mentioned in the question that are concerned with the design and production of yarn, cloth and clothing, but they face high competition.

According to the question, Khaadi is the brand in Pakistan which is capturing the most of the market share and profit. According to the characteristics, Khaadi fall under the market structure of Oligopoly. Oligopoly is the market structure in which only few of the firms are dominating in the industry.

So now defining the two characteristics of Khaadi as oligopoly; one is, Khaadi is the dominating brand with the highest market share in the textile industry. Secondly the products of Khaadi are homogeneous but differentiated because of the specialized hand woven products, which other brands hardly practice.

So Khaadi falls under the Market Structure of Oligopoly.