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Unformatted text preview: 1 Monopolistic Competition Chapter 12 Chapter 12-1 Introduction • Market structure is the focus real-world competition. • Market structure refers to the physical characteristics of the market within which firms interact. Introduction • Market structure involves the number of firms in the market and the barriers to entry. Introduction • Perfect competition, with an infinite number of firms, and monopoly, with a single firm, are polar opposites. • Monopolistic competition and oligopoly lie between these two extremes. Introduction • Monopolistic competition is a market structure in which there are many firms selling differentiated products. • There are few barriers to entry. Introduction • Oligopoly is a market structure in which there are a few interdependent firms. • There are often significant barriers to entry. 2 What is Monopolistic Competition? • Monopolistic competition is a market structure in which: –There are a large number of firms –The products produced by the different firms are differentiated –Entry and exit occur easily Product Differentiation • Product differentiation implies that the products are different enough that the producing firms exercise a “mini- monopoly” over their product....
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This note was uploaded on 01/01/2011 for the course ECON 101 taught by Professor E during the Spring '10 term at American College of Computer & Information Sciences.
- Spring '10
- Monopolistic Competition