Monopolistically competitive markets are a combination of perfectly competitive and a monopoly.
Thus the firm's are:
Price takers due to competition.
Price makers because they sell slightly different products.
Monopolistically competitive markets are characterized by:
Lots of firms
Differentiated Products:
Advertisements
Brand Names
Free Entry
They produce on the downward sloping portion of ATC at a price above marginal cost.
They cause deadweight loss because price is above market cost.
Their goals are to promote brand loyalty that can be irrational at times.
These markets aren't easily government fixed like the other monopolies.
No comments:
Post a Comment