What is the market structure of shops selling sports shoes in Hong Kong? List three ways of competition among firms under this market structure?

The market structure of shops selling sports shoes in Hong Kong can be classified as monopolistic competition. This is because there are many sellers (Nike, Adidas, New Balance, etc.) selling differentiated products, i.e., sports shoes with different designs, features, and brand images.

Under this market structure, firms compete in the following ways:

1. Product Differentiation: Firms try to differentiate their products from those of their competitors by improving the design, quality, and features of their sports shoes. They may also offer additional services such as custom-made shoes or excellent after-sales service.

2. Price Competition: Firms may also compete on price. They may offer discounts, sales promotions, or loyalty programs to attract customers. However, due to product differentiation, price competition is less intense compared to a perfectly competitive market.

3. Advertising and Branding: Firms invest heavily in advertising and branding to increase their brand recognition and customer loyalty. They may use celebrity endorsements, sponsor sports events, or engage in other marketing activities to promote their brand image.