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Lecture 5

MGEC40H3 Lecture Notes - Lecture 5: Monopolistic Competition, Oligopoly, Perfect Competition


Department
Economics for Management Studies
Course Code
MGEC40H3
Professor
Jack Parkinson
Lecture
5

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MGEC40 Lecture 5
Outline
1. Competitor Identification & Market Definition
2. Market Structure & Competition
4 Types of Market Structure
Perfect Competition
No market power
Monopoly
Most market power because there is no competition
Gets to set the price
Oligopoly (imperfect competition)
Monopolistic competition (imperfect competition)
INSERT SCALE FIG.
SCP Paradigm
INSERT FIG.
Market share is about the volume being sold
But you often want to know about profits, so market performances includes these
Competition Identification
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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