Final answer:
Albertson's Supermarkets entering into DVD rentals to compete with Blockbuster is an example of monopolistic competition, characterized by many firms selling distinctive but related products.
Step-by-step explanation:
Albertson's Supermarkets recently offering DVD rentals to compete with Blockbuster is an example of monopolistic competition. Monopolistically competitive markets involve a large number of competing firms that sell distinctive products. In this case, Albertson's Supermarkets and Blockbuster are both competing in the DVD rental market, but they offer different services and products.
When Albertson's Supermarkets began offering DVD rentals to compete with Blockbuster, they were engaging in what is known as monopolistic competition. This type of market structure features many firms that compete against each other while selling products that are distinctive but not identical. For example, different stores at a mall may sell a variety of clothing styles, with each store having its mini monopoly on style, brand, or flavor. Monopolistic competition captures a mixture of competition and mini-monopoly due to product differentiation, with firms striving to capture market share from competitors through distinction in product offerings.