BMGT 350 Lecture Notes - Lecture 13: Monopolistic Competition, Demand Curve, Natural Monopoly
17 Oct 2017
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Raise price and market it as better. Firm"s offering perceived as different by buyer. Ex: coke, pepsi, rc cola, sam"s choice. Pepsi has marketed itself as young people drink. My parents drink coke, but we do pepsi. Just to have the seed money upfront need a lot of it. Airline industry -have to have contracts, deal with air violations, etc. Signaling behavior: legal, moves in direction of --- Having no rivals (very rare)-last firm standing. Rewarded with setting own price, restrict supply, call own shots. Gates argument: he didn"t have the 5 non microsoft people in the hearing-he was a page in congress before microsoft. 90 people out of 100 in the courtroom said they used microsoft and gates argued not monopolist because ten people didn"t raise hands. Money left after you"ve paid necessary living expenses. Explosive demand for online music ipods, iphones. Teens see nothing wrong with sharing" copyrighted music. Music industry is driven by young people.
