Lecture Notes III

Lecture Notes III - o Collusion is impossible o Each firms...

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Pound 1 Seth Pound Ibrahim Bayaan ECON 2106 B 9 Nov 2006 Lecture Notes Monopolistic Competition o Many firms competing o Each firm sells a differentiated product o No barriers to entry/exit o Firms compete on Price, Quality, and Marketing Monopolistic Competition Results In o Each firm can differentiate in price from the market average o No on firm can affect the decisions of other firms
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Unformatted text preview: o Collusion is impossible o Each firms good is a close substitute to other firms goods o Change in price doesnt eliminate demand completely o Long run -> no economic profit Firms Compete On o Quality: includes design, reliability, and service o Price o Marketing: advertising and packaging...
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