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Unformatted text preview: Recall that real transport costs were reduced = allowed firms to participate in national markets o Few firms managed to maintain monopoly power The SR monopoly power of firms has typically eroded in the LR due to entry b/c profits create an incentive for entry. o Most markets were closer to oligopolies A few firms producing a good that is similar o Diversification meant availability of substitutes More diversification > more price elastic demand Thus, increase number of substitutes limits the market power of “monopoly” firm o Technological change meant opening of barriers to entry 18:32 18:32...
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- Spring '10
- Financial services, monopoly power, SR monopoly power