101chapter9 - 9. Monopolistic Competition 9. &...

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9. Monopolistic Competition 9. Monopolistic Competition Monopolistic Competition Oligopoly
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Measuring market dominance Measuring market dominance 4-firm conentration ratio % sales from 4 largest firms > 40% then oligopoly < 40% then monopolistic comp.
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Herfindahl-Hirschman Index (HHI) Herfindahl-Hirschman Index (HHI) largest 50 firms sum square of % market share used by Justice Department if monopoly = (100) 2 = 10,000
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HHI (cont.) HHI (cont.) if < 1000 market is competitive if > 1800 market is uncompetitive
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Oligopoly Oligopoly small number of firms interdependent behavior barriers to entry
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examples examples Airlines Automobiles Cereal Soft Drinks
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what types of barriers? what types of barriers? economies of scale auto industry legal restrictions brand recognition cereal, soft drinks control over essential resource
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Firm behavior Firm behavior no one model of behavior set of possible behaviors
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101chapter9 - 9. Monopolistic Competition 9. &amp;...

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