ECO2201_Slides_8.1_Monopolistic_Competition.pdf

ECO2201_Slides_8.1_Monopolistic_Competition.pdf -...

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Sorakom (Baltic) Ngamdecho Department of Business Economics ECO 2201 Microeconomics Lesson 8.1 Monopolistic Competition 1 Sorakom (Baltic) Ngamdecho Department of Business Economics Monopolistic Competition ECO 2201 Lesson 8.1 1. Introduction ì What is Monopolistic Competition? ì Monopolistic Competition Characteristics 2. Demand and Marginal Revenue 3. Profit Maximization 4. Output Determination (Choosing Q) 5. Long Run Outcome 6. Market Efficiency 7. Product Differentiation 8. Advertising Review Road Map 1
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Sorakom (Baltic) Ngamdecho Department of Business Economics ECO 2201 Microeconomics Lesson 8.1 Monopolistic Competition 2 ì Four Market Models 1. Pure (or perfect) competition 2. Pure monopoly 3. Monopolistic competition 4. Oligopoly Market Structure (Revisited) 2 Pure Competition Monopolistic Competition Oligopoly Pure Monopoly Market Structure Continuum Ch. 10-11 (lesson 6.1-6.3) Ch. 13 (lesson 8.1) Ch. 13 (lesson 8.2) Ch. 12 (lesson 7.1-7.3) ì Four Market Models Market Structure (Revisited) 3 Characteristic Pure/Perfect Competition Monopolistic Competition Oligopoly Monopoly Number of firms A very large number Many Few One Type of product Standardized Differentiated Standardized/ differentiated Unique; no close subs. Control over price None Some, but within rather narrow limits Limited by mutual inter-dependence; considerable with collusion Considerable Conditions of entry Very easy, no obstacles Relatively easy Significant obstacles Blocked Nonprice Competition None Considerable emphasis on advertising, brand names, trademarks Typically a great deal, particularly with product differentiation Mostly public relation advertising
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Sorakom (Baltic) Ngamdecho Department of Business Economics ECO 2201 Microeconomics Lesson 8.1 Monopolistic Competition 3 1. Introduction ì What Is Monopolistic Competition? ì Monopolistic competition = monopoly + (pure or perfect) competition ì So, monopolistically competitive market exhibits some features of monopoly and some feature of perfect competition. ì It behaves like a monopolist in the short run, and a perfect competitor in the long run. 4 ì Terminology 1. Introduction 5 Market Structure Firms Pure Competition/ Perfect Competition/ Perfectly Competitive Market Purely Competitive Firms/ Perfectly Competitive Firms Monopolistic Competition/ Monopolistically Competitive Market Monopolistically Competitive Firms Oligopoly/ Oligopolistic Market Oligopolists/Oligopolies/ Oligopolistic Firms Monopoly/ Monopolistic Market Monopolist/ Monopolistic Firm
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Sorakom (Baltic) Ngamdecho Department of Business Economics ECO 2201 Microeconomics Lesson 8.1 Monopolistic Competition 4 ì Some Terminology ì Monopoly ì A monopolistic firm = a monopolist ì Monopolistic market = monopoly ì Monopolistic competition ì Monopolistically competitive firm = monopolistic competitor ì Monopolistically competitive market = monopolistic competition 1. Introduction 6 ì Monopolistic Competition Characteristics 1.
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