The coffee industry is one of the most recognizable and competitive markets worldwide. While independent coffee shops exist in almost every city, a few large companies, such as Starbucks, Dunkin’, and McCafé, dominate the market. This raises an important economic question: Is the coffee shop industry an oligopoly, where a few major firms control the market, or does it exhibit monopolistic tendencies? This project challenges students to investigate how market structures shape competition, pricing, and consumer choice within the coffee industry.

Students will analyze real-world data on the coffee industry, looking at factors such as market share, pricing strategies, brand differentiation, and barriers to entry. They should examine whether the industry follows the characteristics of an oligopoly, where a few dominant firms influence market conditions while still competing, or whether it behaves more like a monopoly, where a single company holds significant market control.

A key focus of this investigation will be on branding and differentiation. Unlike perfect competition, where products are identical, coffee brands use loyalty programs, pricing strategies, and product variety to create a sense of uniqueness. Students should explore whether these strategies increase competition or help dominant firms maintain market power. They should also assess whether new entrants can compete or if barriers such as high advertising costs and economies of scale prevent smaller businesses from gaining traction.

The final investigation report will summarize findings on market concentration, competitive behavior, and industry trends, concluding whether the coffee market is a true oligopoly, a monopolistic competition, or exhibits some monopolistic features. The goal of this project is to help students understand how different market structures impact pricing, competition, and consumer choice in everyday industries.