ECON 203 Lecture Notes - Lecture 22: Perfect Competition, Imperfect Competition, Oligopoly
Document Summary
4 general kinds of market failure: 1. Imperfect competition: the way individuals and firms compete in the market. Different if you have one seller and many buyers or if sellers and buyers are different sizes, like monopoly oligopoly you lose some quality of perfect competition ex. If firms lose prices they wont lose all customers instead of demand curve being horizontal, it will be downward sloping. When firm maximizes profit mr does not = mc this means we can"t establish general equilibrium: 2. Public goods: a good that cannot be produced for one person without making it available to everyone, free of charge. Street lights, if the street turns on the lights for me and you walk by, you aren"t paying to see where you are going. No market for the good because no one is willing to pay for it. You don"t have the perfectly competitive outcome.
