We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Nobody downloaded yet

Monopolistic Competition - Essay Example

Comments (0)
Summary
Monopolistic Competition I. Monopolistic Competition: Definition and Features A monopolistic competition is a market where many firms sell products that are similar but not identical (Mankiw 2007, p. 40). Mankiw (2007, p. 341) identified four types of market structure (monopoly, oligopoly, perfect competition, and monopolistic competition) and pointed out that in a monopolistic competition, there are many firms selling differentiated products for the same product (as pointed out earlier, the products are “similar but not identical”)…
Download full paper
GRAB THE BEST PAPER
Monopolistic Competition
Read TextPreview

Extract of sample
Monopolistic Competition

Download file to see previous pages... Figure 1 is illustrative for differentiating market structure and the chapters refer to the chapters in Mankiw (2007). Figure 1. Gregory Mankiw on four types of market structure Source: Mankiw (2007, p. 341) Mankiw (2007, p. 341) elaborated that there is no “magic number” that would allow us to determine what is “few” or “many” firms as reality is never as precise as theory. Samuelson and Nordhaus (2001, p. 168) had viewed monopolistic competition as “imperfect competition”. Further, they described the type of competition to be “very common” (Samuelson and Nordhaus 2001, p. 187). Earlier, Hunt (2000, p. 41) reported that the theory of monopolistic competition was developed by Edward Chamberlin in 1933 in which the latter complained that his theory was wrongly lumped with Joan Robinson’s theory of imperfect competition. In particular, Hunt (2000, p. ...
In contrast, through product differentiation, a firm in a monopolistic competition has a portion of the market in which he has a monopoly. For instance, the pants industry has Levis and Wrangler, for example, and each brand has a set of customers loyal to the brand. For their respective loyal customers, each firm is a monopoly facing a specific demand curve. Varian (2005, p. 461) pointed out in a monopolistic competition, “each firm faces a downward-sloping demand curve for its product.” This is illustrated in Figure 2. Figure 2. Monopolistic Competition in the Short Run Source: Mankiw 2007, p. 369 A diagram similar to Figure 2 of the earlier page is in Depken (2006, p. 199) as well as in Taylor (2007, p. 293). In Figure 2 of the earlier page, it is clear that a monopolistic competitive firm maximizes profit where its marginal revenue equals marginal cost (Mankiw 2007, p. 369). However, as shown in Figure 2, this can lead to a loss or profit, depending on the costs curves confronting the firm (Mankiw 2007, p. 369). The left panel of Figure 2 in the immediately preceding page indicates a profit for the monopolistic competitive firm while the one on the right panel of Figure 2 indicates a loss. Meanwhile, it must be pointed out that a much earlier book, Eckert and Leftwich (1988, p. 212) had described a much more elastic demand curve for a monopolistic competition or a demand curve that is close to a horizontal straight line to reflect that demand can either significantly drop or increase with prices changes in a monopolistic competition. In other words, this means that the demand curve facing the competitively monopolistic firm in the short run is highly elastic. Subject to ...Download file to see next pagesRead More
Comments (0)
Click to create a comment or rate a document
CHECK THESE SAMPLES - THEY ALSO FIT YOUR TOPIC
What are the main differences between Monoploy and Monopolistic Competition market structure
For example, British Telecom enjoyed a monopoly until 1988 when the UK office of telecommunication decided to end it. The basis for a monopoly market is the existence of barriers to entry.
5 Pages(1250 words)Essay
Monopoly, Oligopoly, Monopolistic competition, or Perfect competition
Rival firms in an oligopoly match each other’s price cuts but do not match each other’s price increases. Competition in an oligopoly primarily takes the form of advertising and product differentiation. There are a lot of barriers to entry in an oligopoly like economies of scale, product differentiation and brand loyalty, mergers and takeovers etc (Slomon 174).
3 Pages(750 words)Essay
Monopolistic Competition versus Monopoly
The group of companies prior to the merger was individual competitors in a market dealing with the same products. However, after being bought by two lawyers, the environment is bound to change as the competitive market changes in structure. The preceding scenario is an example of an imperfect competitive market referred to as monopolistic competition.
6 Pages(1500 words)Essay
What are the main differences between Monopolistic Competition and Oligopoly market structuresWhich of these market structures best serves the interests of the consumer and why
What are the main differences between Monopolistic Competition and Oligopoly market structures? Which of these market structures best serves the interests of the consumer and why? Monopolistic competition falls under the market structure of imperfect competition where the produces sell differentiated products where the products are not perfect substitutes.
4 Pages(1000 words)Essay
Monopolistic Competition. Concept, Advantages and Limitations
This essay focuses on the relative efficiency of the monopolistic competition, certain key characteristics of that type of market, its advantages to producers and customers. It is argued, that the firms operating in monopolistic competition can benefit greatly and reap benefits that it offers, but the customers do not benefit from it necessarily.
3 Pages(750 words)Essay
Monopolistic competition in fastfood business
As the companies provide almost identical products, competition in the industry centers not only on the price of the products but on other factors as well. Such factors as quality of the products, their promotion and advertising as well as other elements that are not directly related to the price play important part in the industry with monopolistic competition.
8 Pages(2000 words)Essay
Four types of markets: Monopoly, Oligopoly, Monopolistic competition and Perfectly Competitive market
In three years time the patent on the “Neutron” expires and another competitor enters the market making the market an Oligopoly. After a few years, since Quaser faces Monopolistic competition, it has to change its pricing and marketing strategies as there are more competitors and less possibilities of controlling the price
2 Pages(500 words)Essay
Compare and contrast perfect competition and monopolistic competition. Also Explain how equilibrium is determined in the Keynesian Income Expenditure
The number of firms in Monopolistic competition is fairly large. Under the Monopolistic competition, the firms sell differentiated products. Product differentiation may be real or imaginary.
2 Pages(500 words)Essay
Compare and contrast perfect competition and monopolistic competition
Independent decision making is a very important characteristic of monopolistic competition. Positive profits are pursued by firms and they enter in numbers under monopolistic competition. Perfect
1 Pages(250 words)Essay
Perfect competition, monopolistic competition, oligopoly and monopoly
Firstly, a perfect competition situation comprises of a large number of small firms that compete with each other and produce at minimal costs for every unit. Secondly, a monopoly does not have rivals in the industry. It minimizes output to
6 Pages(1500 words)Essay
Let us find you another Essay on topic Monopolistic Competition for FREE!
Contact us:
+16312120006
Contact Us Now
FREE Mobile Apps:
  • About StudentShare
  • Testimonials
  • FAQ
  • Blog
  • Free Essays
  • New Essays
  • Essays
  • The Newest Essay Topics
  • Index samples by all dates
Join us:
Contact Us