MGEC40H3 Lecture Notes - Lecture 5: Monopolistic Competition, Oligopoly, Perfect Competition
DepartmentEconomics for Management Studies
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MGEC40 – Lecture 5
1. Competitor Identification & Market Definition
2. Market Structure & Competition
4 Types of Market Structure
•No market power
•Most market power because there is no competition
•Gets to set the price
Oligopoly (imperfect competition)
Monopolistic competition (imperfect competition)
INSERT SCALE FIG.
•Market share is about the volume being sold
•But you often want to know about profits, so market performances includes these
•What, who, why about our competitors
•Competitors don’t have to make the exact same goods
•Some products are more substitutable
oHow can you tell how close A & B are? Ex.) Pepsi or coke?
oDepends on preferences/psychology
•Competitors sell “close” substitutes
Cross Price Elasticity: INSERT FORMULA
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