ECON 101 Chapter Notes - Chapter 11: Imperfect Competition, Monopolistic Competition, Edward Chamberlin
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ECON 101 Full Course Notes
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Document Summary
Two thirds industries made up of firms that are small relative to the size of the market. Perfectly competitive model: ex. forest and fish products, agriculture, raw materials. Theory of monopolistic competition many small firms with some market power. One third dominated by either a single firm or a few large ones: ex. electric utilities, telephone, cable or digital tv, internet (subject to government regulation) Service industries recent development of large firms. Theory of oligopoly small number of large firms with market power and actively compete with one another. Highly concentrated small number of large firms. Concentration ratio fraction of total market sales controlled by the largest four sellers/firms. Industry has power concentrated in the hands of only a few firms or dispersed over many. Imperfectly competitive firms choose the variety of the product and the price: monopolistic competition large number of small firms, oligopoly small number of large firms.
