Hotels in New York City frequently experience an average vacancy rate of about 20 percent (i.e.,on an average night,80 percent of the hotel rooms are full).This kind of excess capacity is indicative of what kind of market?

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The excess capacity in the hotel industry in New York City suggests a monopolistic competition market, where there are many firms selling differentiated products (different types of hotel rooms) but with some degree of market power to influence prices. This excess capacity implies that there is room for new firms to enter the market or existing firms to expand their operations, which would not be the case in a monopoly or oligopoly market. A perfect competition market would have no excess capacity as all firms would be operating at full capacity all the time.

Hotels in New York City Frequently Experience an Average Vacancy