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Unformatted text preview: * Markup: P>MC Inefficient, but its better than having gov subsidize and lower the price New product = pos externalities Entry= neg externalities on existing firms Differentiated products spend lots on advertisement, homogeneous spends nothing Advertisements makes the market more competitive *Lowers the price of the good Could convey quality, more money since the product is good Brand name distorts perception but conveys info and gives incentive to maintain quality Imperfect, but nothing can be done to improve it...
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- Winter '10