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Chamberlin’s assumptions

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Chamberlin’s assumptions: Since products are differentiated under monopolistic competition, the demand curve for a firm alters. The price of an individual firm may be higher and its sales larger. All this calls for stiff reaction on the part of other rival firms. Moreover under monopolistic competition there is freedom of entry and the products are
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Unformatted text preview: close substitutes. All this makes the market situation highly complex through continuous actions and reactions of the firms. In order to simplify the analysis under such a market, Chamberlin has made certain assumptions. Two of these assumptions deserve special reference. Chamberlin has called them Heroic assumptions ....
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