18 - The Real World of Monopolistic Competition2/18/11...

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The Real World of Monopolistic Competition 2/18/11 12:01 AM Comparing Perfect and Monopolistic Competition
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Product Differentiation A lot of products out there have some market power, some kind of monopoly- i.e. no one else can write Harry Potters, so JK Rowling has some kind of monopolistic power Gives the firm market power over price Wendy’s new product-potato skin fries, natural cut fries o Differentiated value Sources of Product Differentiation Product differentiation -gives market power over price o Actual physical differences o Advertising-signals price and quality Scent-Abercrombie Music playing in store, people staying when good music is playing Build-a-Bear- pay higher price to make bear yourself Galbraith, The Affluent Society- should spend more money on public goods, instead of just advertised goods Hayek, The Road to Serfdom- government telling us what to buy is road to serfdom, people should make own choices Benham, Journal of Law and Economics-experiment, do
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This note was uploaded on 02/17/2011 for the course ECON 011 taught by Professor Yezer during the Spring '07 term at GWU.

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18 - The Real World of Monopolistic Competition2/18/11...

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