Ch12 - Chapter12 12. 12.2Oligopoly .3to12.6 (inchapter13 1 Characteristics 1 2 3( Manyfirms Freeen

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1 Chapter 12 12.1 Monopolistic Competition 12.2 Oligopoly We are skipping sections 12.3 to 12.6 Much of this content is better seen using game theory  (in chapter 13)
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2 Monopolistic Competition Characteristics 1. Many firms 2. Free entry and exit 3. Differentiated product (but output of other firms highly substitutable) Examples  Toothpaste Soap Cold remedies
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3 Monopolistic Competition Quantity $/Q Quantity $/Q MC AC MC AC D SR MR SR D LR MR LR Q SR P SR Q LR P LR Short Run Long Run
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4 Monopolistic Competition Long run Profits   entry    P  firm’s D, until econ profit = 0 P > MC   some monopoly power
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5 Deadweight loss MC AC Monopolistic Competition $/Q Quantity $/Q D = MR Q C P C MC AC D LR MR LR Q MC P Quantity Perfect Competition Monopolistic Competition
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6 Monopolistic Competition Inefficiency   should we regulate? Market power small DWL small but benefit of increased product diversity
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7 Oligopoly Characteristics 1. Small # of firms 2. Differentiated or homogeneous product 3. Barriers to entry Scale economies Patents, technology, name recognition… Examples Auto, Steel, Aluminum, Petrochemicals
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8 Oligopoly Rival behavior
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This note was uploaded on 09/25/2010 for the course ECON Econ 2296 taught by Professor W.graygiovannetti during the Fall '10 term at Langara.

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Ch12 - Chapter12 12. 12.2Oligopoly .3to12.6 (inchapter13 1 Characteristics 1 2 3( Manyfirms Freeen

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