CHAPTER 14 - Chapter 14: Monopolistic Competition I. What...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Chapter 14: Monopolistic Competition I. What is Monopolistic Competition? a. Market structure where large # firms compete, produce differentiated products, compete on quality, price, and marketing, firms free to enter/exit b. Large # of Firms b.i. Small market share-firm’s price can deviate from the avg price of other fims by only a small amt b.ii. Ignore other firms-no one firm’s actions directly affect the actions of the other firms b.iii. Collusion impossible-competition is large, coordination is difficult c. Product Differentiation c.i. Firm makes a product that is slightly different from the products of competing firms c.ii. Close substitutes but not perfect d. d.i. Quality-design, reliability, service provided, ease of access, (run high-low) d.ii. Price-firm that makes high quality product charges higher price d.iii. Marketing-advertising and packaging d.iii.1. High quality product sells at high price, must advertise and package accordingly e. Entry/Exit e.i. No barriers to prevent firms from entering in LR (can’t make economic π)
Background image of page 1

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

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 11/14/2011 for the course ECO 201 taught by Professor Dunlevy during the Fall '08 term at Miami University.

Page1 / 2

CHAPTER 14 - Chapter 14: Monopolistic Competition I. What...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online