ECON 1000 Chapter Notes - Chapter 16: Monopolistic Competition, Imperfect Competition, Breakfast Cereal
2 Feb 2017
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Many industries fall b/w polar cases of perfect competition & monopoly imperfect competition. 2 types of imperfectly competitive markets : oligopolies, monopolistic competition. Oligopoly: market structure in which only a few sellers offer similar/identical products. Concentration ratio statistic that measures a market"s domination by a small # of firms; % of total output in the market supplied by the 4 largest firms. Examples of oligopolies breakfast cereal (concentration ratio of 78%); aircraft manufacturing (81%); electric lamp bulbs (89%); household laundry equipm"t (93%); cigarettes (95%) Monopolistic competition: market structure in which many firms sell products that are similar but not identical; attributes : many sellers many firms competing for the same group of customers, product differentiation. Each firm produces a product that is at least slightly different from those of other firms each firm has a downward-sloping demand curve: free entry & exit firms can enter/exit market w/o restriction.
