ECON101 Lecture Notes - Lecture 11: Monopolistic Competition, Perfect Competition, Oligopoly
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ECON101 Full Course Notes
Monopolistically competitive and oligopolistic markets hybrid of perfect competition and monopoly. Monopolistic competition: market structure in which a large number of firms compete. When a large number of firms exist in a market, implications arise. Each firm has a relatively small share of the market. No firm can dictate market conditions b/c each firm has a relatively small share of the market. Firms are independent of each other: the actions of one firm upon the firm"s many rivals is small, as each firm only has a small share of the market. Another feature of monopolistically competitive markets is that each firm produces a differentiated product. Perceived differences (ex: heinz has convinced more people to perceive that it is a higher quality good than other brands) Product differentiation enables firms to compete in three areas: quality design, reliability, and service, price, marketing advertising or packaging of a good.