 Relatively few industries conform to strict characteristics of perfect competition & monopoly  In most industries: ◦ Competition exists because there are at least two firms in the industry ◦ Competition is imperfect because firms sell products which are not identical to the products of rival firms

 A market structure where a large number of small firms produces non-homogeneous products and where there are no barriers to entry or exit  Model developed by Edward Chamberlain, an American economist, in the 1930s, and mirrored by an English economist, Joan Robison, at the same time

 There is a large number of buyers and sellers in the market, each of which is relatively small and acts independently  There are no barriers to entry or exit  Firms are short run profit maximisers  So far, same as perfect competition, but...

 Firms produce differentiated or non- homogeneous goods  Firms have some price-making power  In reality, most industries have concentration ratios which would suggest they were oligopolistic. Examples of monopolistic competition?

 Video – long run Video  Video – difference between short & long run Video

 Hotel trade  Coach travel  Furniture making  In a town: hairdressing & take-away food

 If you are a firm operating in an industry which enjoys monopolistic competition, what are these?

 Think of a firm and explore the ways it competes on a non-price basis