CAS EC 101 Lecture Notes - Lecture 19: Artificial Scarcity, Natural Monopoly, Price Drop
![CAS EC 101 Full Course Notes](https://new-docs-thumbs.oneclass.com/doc_thumbnails/list_view/2140802-class-notes-us-boston-u-cas-ec-101-lecture3.jpg)
56
CAS EC 101 Full Course Notes
Verified Note
56 documents
Document Summary
Perfect competition: one homogenous product, many buyers and sellers, voluntary exchange, perfect information, rational self-interested agents. Competition is imperfect when one or more of these features doesn"t apply. Various forms/degrees of imperfect competition can be defined when the perfect competition standards found above are modifies in different ways. Imperfect competition from a small number of sellers or from product differences: monopoly (one dominant firm) De beers diamonds: duopoly (two dominant firms) Mastercard and visa: oligopoly (a few firms) Ford, gm, honda, toyota, chrysler, : monopolistic competition (many firms with differentiated products. These firms can raise prices above the competitive equilibrium. Imperfect competition from limited information: adverse selection: bad products or bad customers that cannot be identifies, moral hazard: customers who can"t be supervised consume too much (or behave badly) when other are paying, ex: used cars. Used cars often have hidden problems (adverse selection) Owners wont sell good cars because they think they can get more for them.