ECON 208 Lecture Notes - Monopolistic Competition, Imperfect Competition, Perfect Competition
13 Jul 2012
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Most industries in canada have either a large number of small firms or a small number of large firms. Imperfectly competitive firms have differentiated products and often engage in non-price competition. Strategic behaviour is a key feature of oligopoly. For industries with many small firms, the perfectly competitive model does not adequately explain many industries that have a large number of relatively small firms. For industries with a few large firms, most modern industries that are dominated by large firms contain several firms and these are not competitive markets. Industrial concentration: the concentration ratio measures economic power in an industry shows the market shares of largest 4 or 8 producers (it shows the clout of large and small firms) Defining a market with a reasonable accuracy is difficult. Sometimes the market is much smaller than the whole country. Other times, it is much larger than the entire country.
