MGTA05H3 Lecture Notes - Lecture 5: Monopolistic Competition, Market Power, Monopoly Price
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The various combinations of suppliers and sellers within a given market. Price: price takers, more or less the same. Market power: no power, really small market share. Price: price takers (more or less the same), however the large businesses can set higher prices because of branding. Differentiation: more or less the same, however large companies do have differentiation in an attempt to gain customer loyalty. Barriers: no major barriers to entry or exit unless large firms have some barriers to exit. Price: price setters, firms look closely of each other (best response function) Price: price setters, can charge what it wants (mr = mc) Potential customer search for product; searches for sellers. Seller search for a sale, highlights features and benefits. Encourages and allows entrepreneurs to establish businesses. When buyers and sellers agree, both get what they want (cid:862)the frog a(cid:374)d the pea(cid:272)h(cid:863) A sketch, illustrates business principle called target market.
