Monopolistic Competition = A market structure characterized by a differentiated product and freedom of entry and exit. This chapter defines and describes two intermediary market structures: monopolistic competition and oligopoly. Monopoly power is also called market power, and is measured by the Lerner Index. Monopolies have monopoly power, or the ability to change the price of the good. Monopoly is the other extreme of the market structure spectrum, with a single firm. Therefore, numerous firms means that each firm is so small that it is a price taker. Each perfectly competitive firm is a price taker. In a perfectly competitive industry, each firm is so small relative to the market that it cannot affect the price of the good. The word, “numerous” has special meaning in this context. Perfect competition is on one end of the market structure spectrum, with numerous firms.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |