Lecture B (WK7)

Lecture B (WK7) - Weekly Lectures

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Lecture B (WK7) Welcome Back! Chapter 15 – Monopolistic Competition The characteristics of a monopolistically competitive industry include: 1. A large number of firms 2. No barriers to entry 3. Product differentiation Note that this is NOT describing a monopoly, even though the names are similar. Beginning economics students sometimes don't recognize the differences between the four types of markets, since the names are confusing to them. See the "Characteristics of Different Market Organizations" in figure 15.1, page 304 in your textbook to clarify this point. Most of us are very familiar with firm's attempts to develop product differentiation, since we sit through hours of advertisements each week when viewing the media. By convincing consumers that your product is really different than the competition, businesses increase the market demand for their products and gain limited pricing power in this type of market. Product differentiation reduces the
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Lecture B (WK7) - Weekly Lectures

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