Explain non-price competition strategies, market structures where they are used, their impact, and why oligopolists avoid price wars, using restaurants as an example.

2.1.2 The market structures that practice non-price competition are monopolistic competition and oligopoly.

2.1.3 The impact of offering delivery services (non-price competition) will be an increase in demand for the business's products, leading to an increase in total revenue.

2.1.4 Oligopolists are reluctant to compete on price because of interdependence. If one firm lowers its price, competitors are likely to retaliate by lowering their prices, leading to a price war. This results in lower profits for all firms without significantly increasing market share for any single firm.

2.1.5 Restaurants use non-price competition to make their products or services more price inelastic by:

• Product differentiation: Offering unique menu items, high-quality ingredients, or a distinct culinary style that customers perceive as superior or unique. This reduces the availability of close substitutes.
• Service differentiation: Providing exceptional customer service, creating a unique dining ambiance, or offering convenient services like online ordering and delivery. These factors build customer loyalty and make them less sensitive to price changes.