1. MONOPOLISTIC COMPETITION
CHAPTER 7

2. MARKET STRUCTURES REVIEW: 4 MARKET STRUCTURES WE HAVE COVERED:
PERFECT COMPETITION
MOST MARKETS FALL INTO WHAT WE CALL:
MONOPOLISTIC COMPETITION
OLIGOPOLY

3. MONOPOLISTIC COMPETITION
MANY BUYERS AND SELLERS
COMPETE IN AN OPEN MARKET
PRODUCTS ARE SIMILAR BUT NOT IDENTICAL

4. MONOPOLISTIC COMPETITION 4 CONDITIONS
1) MANY FIRMS
2) FEW BARRIERS TO ENTRY
PATENTS DO NOT PROTECT ANYONE (PRODUCTS ARE DISTINCT ENOUGH TO FALL OUTSIDE THE ZONE OF PATENT PROTECTION)

5. MONOPOLISTIC COMPETITION 4 CONDITIONS
3) SLIGHT CONTROL OVER PRICE
FREEDOM TO RAISE OR LOWER PRICES BECAUSE EACH FIRM’S GOODS ARE A LITTLE DIFFERENT
LIMITED CONTROL OVER PRICE – PRICE IS RAISED TOO HIGH, CONSUMERS WILL BUY A SUBSTITUTE

6. MONOPOLISTIC COMPETITION 4 CONDITIONS
4) DIFFERENTIATED PRODUCTS
THIS SEPERATES MON. COMP. FROM PERFECT COMPETITION
PRODUCTS ARE NOT IDENTICAL

7. EXAMPLES OF MONOPOLISTIC MARKETS
JEANS/CLOTHING
BANKS
JEWELRY
COMPUTERS
SPORTING GOODS

8. OLIGOPOLY
EXAMPLE

9. OLIGOPOLY IMPERFECT FORM OF MONOPOLY
FOUR LARGEST FIRMS PRODUCE AT LEAST 70 TO 80 PERCENT OF THE OUTPUT
CEREAL, SODA, CARS