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Monopolistic Competitors and Entry
If one monopolistic competitor earns positive economic profits, other firms will be tempted to enter the market. A gas station with a great location must worry that other gas stations might...
How a Monopolistic Competitor Determines How Much to Produce and at What Price
The process by which a monopolistic competitor chooses its profit-maximizing quantity and price resembles closely how a monopoly makes these decisions process. First, the firm selects the p...
Choosing Price and Quantity
The monopolistically competitive firm decides on its profit-maximizing quantity and price in much the same way as a monopolist. A monopolistic competitor, like a monopolist, faces a downwar...
Who invented the theory of imperfect competition?
The theory of imperfect competition was developed by two economists independently but simultaneously in 1933. The first was Edward Chamberlin of Harvard University who publishedÂ
Why analyze a firm’s profit maximizing strategies under conditions of monopolistic competition?
This module explains monopolistic competition, the second example of imperfect, or real world, competition (along with oligopoly, which you studied in the previous module). Most of what you...
THE CHOICES IN REGULATING A NATURAL MONOPOLY
So what then is the appropriate competition policy for a natural monopoly? Figure 11.3 illustrates the case of natural monopoly, with a market demand curve that cuts through the downward-sl...
Regulating Anticompetitive Behavior
The U.S. antitrust laws reach beyond blocking mergers that would reduce competition to include a wide array of anticompetitive practices. For example, it is illegal for competitors to form ...
Price Discrimination
Price Discrimination
Throughout this text up to this point, we have assumed that firms sold all units of output at the same price. In some cases, however, firms can charge different prices t...Monopoly and Efficiency
The fact that price in monopoly exceeds marginal cost suggests that the monopoly solution violates the basic condition for economic efficiency, that the price system must confront decision ...
The Inefficiency of Monopoly
Most people criticize monopolies because they charge too high a price, but what economists object to is that monopolies do not supply enough output to be allocatively efficient. To understa...