Monopolistic Competition in the Clothing Industry

Understanding Monopolistic Competition in Fashion

Monopolistic competition, by definition, is when an industry has many firms that offer similar products and services but not completely identical or the perfect substitute. In monopolistic competition, there are not many barriers to exit or enter— making it easy for many firms to sweep into the market and offer similar products. The perfect example of monopolistic competition is the retail and fashion industry— specifically fast fashion. The fashion industry is one of the biggest industries in the world with hundreds of thousands of different brands, both big and small, comprising of it. Although the products are very similar, each product varies in quality and the materials used to make the clothing item. In this essay, I will explain the correlation between fast fashion and monopolistic competition— as well as how this causes copyrighting problems within the industry.

To understand the fashion industry, it is first important to understand how monopolistic competition works. Monopolistic competition consists of many firms in the same industry competing for and targeting the same costumers to buy their products. Production differentiation is what sets different firms and brands apart from one another and is what makes a consumer want to buy a product. While clothing items may look similar, as stated before, each product varies in quality and the materials used to make the clothing item. Clothing items are differentiated through price, quality, reliability, design, and uniqueness. The purpose of product differentiation is to market a product and make it more desirable than others being offered in the market. Therefore, these factors are very important in consumer decision-making, specifically price, because if one brand prices rise and go beyond a consumer’s willingness to pay, then the consumers would choose to buy from a different brand offering a similar product. Another point in monopolistic competition is that consumers will often compare the price and quality of each close substitute in the market and make a decision based on the price and quality combined. This is the point at which the fast fashion industry and monopolistic competition intersect.

The Intersection of Fast Fashion and Monopolistic Competition

In the fashion industry, new brands emerge, whether they or big or small, all the time. The goal of each brand is to sell the best product— the product that is the most differentiated and unique compared to the others. In the world of fashion, fast fashion is a fairly new term. According to the Merriam-Webster dictionary, fast fashion is defined as “an approach to the design, creation, and marketing of clothing fashions that emphasizes making fashion trends quickly and cheaply available to consumers.” In the 1990s, the New York Times coined the term to describe the brand Zara (Rauturier). In 2019, Zara continues to be a fast-fashion brand as well as other popular brands such as Zaful, Fashion Nova, Urban Outfitters, Forever 21, and H&M, for example. These brands are huge components of the industry and yet they are all almost identical and “copycat” versions of each other. Within the fashion industry, besides fast fashion brands, many small creative clothing brands exist and because these brands are so unknown, it makes it a lot easier for bigger brands to completely steal a product.

The Issue of Copyright and Idea Theft in Fashion

In the article “Fashion Brands Steal Design Ideas All the Time. And It's Completely Legal” by Chavie Lieber, it discusses the problem of bigger and established brands stealing product ideas in the fashion industry. Brands such as Zara, Old Navy, Fashion Nova, and Urban Outfitters, to name a few, are all guilty of stealing from known to lesser-known brands all the time. In the article, Lieber made a point to say: “Big fashion brands rip off small ones all the time, the most prolific offenders being fast-fashion companies, whose entire business model revolves around copying trends and bringing them to market quickly.” Monopolistic competition in fashion revolves around copying trends, making these trends more appealing than other brands, and then bringing them into the market faster than other competitors. Sadly, in the fashion industry, there are no copyright laws protecting designers’ creations and ideas— this is why big brands are able to get away with identically copying ideas with really no legal repercussions. In the article, a small clothing company called Mère Soeur, owned by Carrie Anne Roberts, was blatantly ripped off by Old Navy. Roberts designed a shirt with the phrase “Raising the Future” written on it and soon after, Old Navy began selling knockoffs of the t-shirt. After receiving backlash on multiple forms of social media, Old Navy pulled the shirt from their website and emailed Roberts saying that because “…Roberts didn’t trademark the phrases “Raising the Future” or “The Future,” and does not have a trademark for the font or graphic design of the shirts, she has zero legal rights to them,” (Lieber). This very issue of copyrighting in the fashion industry stems from monopolistic competition because fast fashion moves so quickly in terms of production and selling.

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Economic Implications and Legal Challenges in Fashion

For example, if Fashion Nova, a notorious copycat brand, was to copy the design of a smaller designer and sell it as their own, they would mark down the price but they are only able to do this by downgrading the quality of the clothing item. The consumer then faces the decision of whether to buy the more expensive but better-quality piece from the smaller designer, or cheaper worse quality item from Fashion Nova. There is a tradeoff between quality and affordability. Although there is a tradeoff, trends change very quickly and if a clothing piece is trendy in that very season or moment, customers and consumers would be more likely to buy the item that costs less if it is only going to be worn a few times. This results in fast fashion brands successfully being able to steal ideas and get recognition for them while facing no consequences.

While it is very evident that big brands copying and stealing ideas with no consequences is very wrong in a moral standard, it does not seem that way from an economics point of view. Sadly, it is often not seen as a negative or a problem because of how well the economy benefits from the fashion industry. “America’s GDP for fashion is at $350 billion,” said Brittany Rawlings, a fashion law attorney. Because the fashion industry is worth $350 billion, Congress is afraid that if fashion designs are protected, the economic growth will be stunted or come to a halt. Also, experts Kal Raustiala and Christopher Sprigman, who wrote the book The Knockoff Economy: How Imitation Sparks Innovation, fear that enforcing copyright laws could create a hostile environment that makes it hard for brands to enter and exit the industry with ease— especially smaller brands that have not established customer loyalty. Because the industry is doing so well without having any copyright laws in place, the question on whether or not the fashion industry should have them still exists. Raustiala argues that the industry does so well because there are no copyright laws in place— “Copyright has an intent behind it, and the intent is to protect creators so that they continue creating. When we looked at fashion, we saw an industry that was very, very creative and puts out tons of new ideas every season and has done that continuously for decades,” he says.

Consumer Responsibility and the Future of Fashion Industry

Besides economic benefits, many believe that copycats in fashion are the reason why the fashion industry continues to be successful. The average household cannot afford to buy luxury items from brands such as Gucci, so fast fashion companies create a copycat item, giving mass consumers the opportunity to buy into it, thus creating a trend. Christopher Sprigman, author of The Knockoff Economy: How Imitation Sparks Innovation, argues that “…Copycats help create trends and then help destroy them, paving the way for new ones to take their place. Without copying, the fashion industry would be smaller, weaker and less powerful.”

In contrast, some experts also believe the lack of laws are failing the fashion industry (Pike). As a designer, rights should be given to protect one’s creativity and ideas and these rights should not be violated. In the United States, American fashion is considered a manufacturing industry rather than a creative industry (Lieber) and that is why fashion is not protected in the same ways as other creative industries such as art, film, and literature (Pike). Because no laws have been put into place, some designers have begun to use the power of social media as a tactic against copycat designs by using their platform to call out stolen designs. In addition, some designers have also begun creating clothing and garments that are harder to replicate and using more expensive materials and fabrics. Although designers may seem to be the only ones facing a problem in this situation, consumers also hold a level of responsibility. Consumers are responsible when they choose to buy a cheaply made knockoff product as there is harm to the original designer, their brand, and reputation.

Final thoughts

In conclusion, the fashion industry is a very great example of monopolistic competition. Because copycat products are so prominent within the industry, the consumer is faced with the decision to buy an inexpensive and cheaply made clothing item or a quality product made with good materials that are slightly more expensive. In the fashion industry, designers are not protected through copyright laws which raises the question of whether copycat items are generally good or bad. Many experts believe that the industry does so well because there are no laws in place while some experts also believe the lack of laws is failing the fashion industry’s designers. The fashion industry today continues to be a $350 billion industry— an industry where new brands emerge constantly, selling similar but differentiated products. This system will either continue to expand the industry or copyright laws will be put into place and allow designers to have rights to their own ideas and creations.