ECON-221 Lecture Notes - Lecture 18: Imperfect Competition, Monopolistic Competition, Australia Post
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13 Oct 2020
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E. g. australia post, sydney airport corporation: oligopoly a market in which only a few rival firms dominate sales of a product, which may be identical or different. High level of interdependence between firms: monopolistic competition a market in which a large number of firms produce slightly different products that are reasonably close substitutes for one another. E. g. petrol market: difference between perfect and imperfect markets. Whereas the perfectly competitive firm faces a perfectly elastic demand curve for its product, the imperfectly competitive firm faces a downward sloping demand curve. In the perfectly competitive industry, the market supply and demand curve intersect to determine an equilibrium market price. At that price, perfectly competitive firms can sell as many units with no incentive to charge more than market price as it wont sell anything. Demand for such a firm"s product is perfectly elastic at the good"s market price and the firms demand curve is thus a horizontal line as the market price.
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