Chapter 9 - 2009-11-171Chapter 9Chapter 9Imperfect...

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Unformatted text preview: 2009-11-171Chapter 9Chapter 9Imperfect Competition: Imperfect Competition: MonopolyMonopolyImperfect CompetitionImperfect Competition Imperfectly competitive firms have some control of price. Three types1. Monopoly: only one seller, no close substitutes2. Monopolistic competition: many firms with differentiated productsThese products are all close substitutes3. Oligopoly: a small number of firms producing close substitutes2009-11-172The Essential DifferenceThe Essential DifferenceQuantityPriceImperfectly Competitive FirmDQuantityPricePerfectly Competitive FirmDMarket Power: a firms ability to raise the price of a good without losing all its sales. Sources of Market PowerSources of Market PowerPerfect CompetitionMany firmsStandardized productsResources fully mobileFree entry and exitFully-informed buyers and sellersViolationsEconomies of scale (Natural monopoly)Network EconomiesExclusive control over resourcesGovernment licenses and franchisesPatents and Copyrights2009-11-173Market Power: Economies of ScaleMarket Power: Economies of Scale...
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Chapter 9 - 2009-11-171Chapter 9Chapter 9Imperfect...

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