ECON 20A Lecture Notes - Lecture 11: Monopolistic Competition, Profit Maximization, Perfect Competition
Document Summary
Seller can distinguish each consumer"s willingness to pay and charges each consumer accordingly. Producers cannot distinguish between different types of demand elasticities but offer varied bundles to consumers, who then go ahead and pick the one most suited to their demand type. If monopoly doesn"t price discriminate and create bundles, they lose a particular amount of consumers and miss out on that profit. Coupons sent by stores, different types of people that decide to spend time on couponing and request the discount different needs/wants and elasticities of demand. Producers know different markets have different elasticities of demand. Oligopoly - market structure with few firm selling identical products. Seems like all the books are competing with each other but actually are competing with their own genre. Every differentiated product has a monopoly over what they are selling. Which is why they face downward sloping demand curve and are price makers. Free entry and exit into the market.
