Econ103part08 - Part 8 Monopolistic Competition and...

Info icon This preview shows pages 1–6. Sign up to view the full content.

View Full Document Right Arrow Icon
Part 8 Monopolistic Competition and Oligopoly Most markets are not pure monopolies or perfectly competitive, but lie in-between Monopolistic competition is a model of a market that is competitive— many sellers, free entry—but with differentiated products Oligopoly has few sellers and involves strategic interaction between them which is difficult to predict
Image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Monopolistic Competition Large number of firms Each firm produces a differentiated product Each firm’s product is a close but not perfect substitute for other firm’s products Firms compete on product quality, price and marketing (advertising and packaging) Firms are free to enter and exit
Image of page 2
Monopolistic Competition Large number of firms means each firm is small relative to the whole market One firm’s actions have negligible effect on others No collusion is possible Each firm’s demand curve for its own brand will be downward sloping but highly elastic In the long run entry and exit will occur unless profits are just normal
Image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Short Run Equilibrium P Q MC ATC D MR P* Q* Economic profit Same as monopoly equilibrium except that The demand curve will be more elastic
Image of page 4
Long Run Equilibrium MC ATC D MR Q P P* Q* Long run equilibrium. New entry occurs which shifts each firm’s demand curve in until no economic profit remains
Image of page 5

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Image of page 6
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern