Chapter16 Additional Insights - from the competitors’...

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Chapter 16: Monopolistic Competition and Oligopoly This chapter takes a look at the behavior of firms in a monopolistically competitive industry and an oligopoly. These industry structures fall in between a perfect competition and a monopoly. A monopolistic competition is a market structure in which there are many firms selling differentiated products; there are few barriers to entry. Basically, there are firms that produce a similar product so the firms compete with one another. Each firm is trying to create a niche for itself and one way to do that is to make their product look different
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Unformatted text preview: from the competitors’ product. Hence, they try to product differentiate in the eyes of the buyer(s). An oligopoly is a market structure in which there are only a few firms; there are often significant barriers to entry. Oligopoly behavior is often characterized by a recognized inter-dependence between the firms. Oligopoly behavior can be fairly complex and interactive. The field of game theory applies to oligopoly behavior. This is an interesting area but it is well beyond the scope of this course. Please read the chapter for an overview of these two industry structures....
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