Chap016comparison

Chap016comparison - Monopolistic Competition and Oligopoly...

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Monopolistic Competition and Oligopoly 16 Comparison of Market Structures Monopoly Oligopoly Monopolistic Competition Perfect Competition No. of firms One Few Many Almost infinite Barriers to entry Significant Significant Few None Pricing decisions MC = MR Strategic pricing MC = MR MC = MR = P Output decisions Most output restriction Output restricted Output restricted, product differentiation No output restriction Interdependence No competitors Interdependent decisions Each firm independent Each firm independent LR profit Possible Possible None None P and MC P > MC P > MC P > MC P = MC 16-1 Monopolistic Competition and Oligopoly 16 Classifying Industries and Markets in Practice • An industry seldom fits neatly into one category or another Cross-price elasticity measures the responsiveness of the change in demand for a good to a change in the price of a related good • One way to classify markets in practice is by its cross price elasticity • Goods with a cross-price elasticity of 3 or more are in the same industry 16-2 Monopolistic Competition and Oligopoly 16 The North American Industry Classification System North American Industry Classification System
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This note was uploaded on 12/08/2011 for the course ECON 201 taught by Professor Staff during the Fall '10 term at Rio Hondo College.

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Chap016comparison - Monopolistic Competition and Oligopoly...

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