1. Monopolistic Competition

2. Learning Objectives: What is Monopolistic Competition? How is it different from Perfect Competition or Monopoly? How does a monopolistically competitive firm maximize its profit? What is the long run outcome of a monopolistically competitive market? What is product differentiation?

3. Features of a Monopolistically Competitive Market Many buyers and sellers Firms are producing similar but not perfectly identical products Buyers can differentiate among products sold by different firms There is free entry and exit Example: Jewelry market Example: Toothpaste market

4. Profit Maximization for a Monopolistically Competitive Firm

5. Long Run Equilibrium in a Monopolistically Competitive Market

6. Product Differentiation or the Widening of Choice Comparative Advertising Brand value of a product Targeted or niche marketing R&D

7. Brand Myopia Successful product differentiation leading to lack of innovation and change in the firm Example: Blackberry Example: Nokia Example: Maggi

8. Optimal Advertising