ECON 040 Lecture Notes - Lecture 23: Marginal Revenue, Invisible Hand, Takers
13 Aug 2020
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Imperfectly competitive market: market in which firms have at least some ability to set their own price. Pure monopoly: market in which single firm is only supplier of a product for which there are no close substitute. Oligopoly: in the market only a few rival firms producing close substitute goods. Monopolistic competition: market in which large number of firms produce slightly differentiated products, reasonably close substitutes for one another. Imperfectly competitive firm has downward sloping demand curve. Will have a barrier if somebody has exclusive control over important inputs i. e. china owns 90% of worlds raw materials. Governments create monopolies themselves: pharmaceutical companies and patents, why would people want to do research for others to profit. Network economy: if happiness you derive increases when more people own the same good. In imperfect competition, different since marginal revenue is decreasing rather than equal to price. Should produce at the quantity where marginal revenue is equal to the extra cost.
