monopolistic competition essay grade 12

THE DYNAMICS OF IMPERFECT MARKETS GRADE 12 NOTES - ECONOMICS STUDY GUIDES

• Key concepts
• Output profit and loss
• Oligopolies
• Monopolistic competition
• Summary of market structures

There are a number of different types of imperfect markets, e.g. monopolies, oligopolies and monopolistic competition. An imperfect market is characterised by imperfect competition. Some participants have earlier or exclusive access to information that benefits them in the marketplace at the expense of their competitors. Certain participants will be able to access the market more easily than other participants, i.e. the supply of and demand for products will not be equal, and the matching of buyers to sellers will not be immediate. Overview

7.1 Key concepts

These definitions will help you understand the meaning of key Economics concepts that are used in this study guide. Understand these concepts well.

Use mobile notes to help you learn these key concepts. See page xiv in the introduction for more.

7.2 Monopolies

A monopoly exists when there is one seller of a good or service for which there is no close substitute. 7.2.1 Characterictics of monopolies

• There is only one seller of the product
• There are barriers to entry. These are caused by patents and other forms of intellectual property rights, control over resources, government regulations and decreasing costs.
• The monopolist is regarded as a price maker since it is able to influence the market price through changing the quantity it supplies to the market.
• The are no close substitutes. The product cannot be easily replaced. Consumers have no choice in price and quality of the product.
• There is no competition. One business in the market will control the supply of goods and services.
• Products are differentiated and unique. Monopolies manufacture a variety of products which are difficult for other companies to copy.
• Large amounts of starting capital are required. Large industries like Eskom and SASOL require millions of starting capital.
• Monopolies have legal considerations. New inventions are protected by patent rights. Services, like the Post Office are protected by law and other businesses are prohibited from entering the market.
• It is also possible for the monopolist to make an economic profit in the long run. This is because it faces no competition from new entrants as a result of the barriers to entry.

Monopolies can be classified as two main groups due to barriers that exist Natural monopolies: High development costs prevent others from entering the market and therefore the government supplies the product. E.g. Electricity in South Africa is provided by the government enterprise, Eskom. It costs billions of rands to build and maintain power stations and therefore there are no other suppliers. Artificial monopolies : Here the barriers to entry are not economic in nature. An example of a barrier is a patent. A patent is a legal and exclusive right to manufacture a product, e.g. Denel Land Systems manufacturing Casspirs. 7.2.2 The demand curve of the monopolist

• Under perfect competition the individual producer faces a horizontal demand curve where D = MR = AR, since it is a price taker.
• By contrast, the monopolist faces a normal market demand curve which slopes downwards from left to right. Here D = AR.
• It is also the market (or industry’s) demand curve, since the monopolist is responsible for the entire output of the industry.

7.2.3 The marginal revenue curve of a monopolist

• Since a monopolist faces a downward sloping demand curve, its marginal revenue curve and its demand curve are not the same curve as is the case with an individual producer under perfect competition.
• Under perfect competition, the individual producer is a price taker and can sell any quantity at the market price and therefore faces a horizontal demand curve, which is also its marginal revenue curve.
• The demand curve for a monopolist, which is downward sloping, implies that, if it wishes to increase its sales by an additional unit, it must decrease the price of the product.
• The lower price applies to all its customers. Its marginal revenue - that is the amount by which total revenue increases if it sells an additional unit – will therefore be less than the price.
• The marginal revenue curve and the demand curve are therefore not the same curve. The Marginal revenue curve will be lower than the demand curve.

Activity 1 Use the table below of a typical monopolist and plot the revenue curves on the same set of axes. Notice the position of the Marginal revenue curve in relation to the Demand curve.

7.3 Output profit and loss

7.3.1 Revenue

• The demand curve for a monopolist is the market demand curve and slopes downwards from left to right (DD/AR). See the top graph in Figure 7.1.
• Any point on the curve is an indication of the quantity of the product to be sold and the price at which trade takes place.
• Any price-quantity combination on the demand curve is also its average revenue (AR) curve.
• The average revenue from each product is calculated by dividing the total revenue by the quantity = the price. See the bottom graph in Figure 7.1 (left).
• The marginal revenue (MR) curve runs below the demand curve (AR) – it always intersects the horizontal axis at a point halfway between the origin and the point of intersection of the demand curve (AR).
• The cost structure of the monopoly is the same as that of competitive businesses.
• Determine the point where MC = MR, the point where the production cost of the last unit is equal to the revenue it earns (point e) – profitmaximising production quantity of Q1 on the horizontal axis.
• To determine the price at which Q1 is sold, move vertically upwards from e to L on the demand curve. The market price is therefore determined at P.
• Total revenue is greater than the short-term total costs. The monopolist makes a profit (due to demand and cost of production).

7.3.3 Economic loss in the short term When you draw the economic loss for the monopolist, the graph stays the same, EXCEPT the AC curve moves to the right - up, and totally misses the AR (demand) curve (see Figure 7.7).

• The monopoly suffers short-term losses when the AC curve lies above the demand curve (DD).
• Equilibrium is reached where MR = MC (a loss-minimising situation).
• The monopoly will produce a quantity Q and sell at price P. The total costs are the area OCLQ; the total revenue is the area OPNQ. The loss will be that part that is shaded (the area PCLN).

7.3.4 Comparison of a monopoly and a perfect market 

Loss Some people argue that a monopolist always makes an economic profit. This is not the case. Profitability of a monopolist depends on the demand for the product as well as the cost of production.

7.4 Oligopolies

An oligopoly exists when a small number of large companies are able to influence the supply of a product or service to a market. By controlling the supply of the product or service on the market, oligopolies aim to keep its prices and profits high. Oil companies are one of the best examples of an oligopoly. A special type of this market form is a duopoly – an industry with only two producers. 7.4.1 Characteristics of oligopolies

• There is limited competition. Only a few suppliers manufacture the same product.
• Products may be homogenous or differentiated.
• This market is characterised by mutual dependence. The decision of one company will influence and will be influenced by the decisions of the other companies.
• Oligopolies can frequently change their prices in order to increase their market share. However this can result in a price war.
• Extensive use is made non-price measures to increase market share e.g. advertising, efficient service or product differentiation.
• Producers have considerable control over the price of their products although not as much as in a monopoly.
• If oligopolies operate as a cartel, firms have an absolute cost advantage over the rest of the competitors in the industry. Abnormal high profits may be a result of joint decisions in an oligopoly.
• Entry is not easy in an oligopolistic market. This is due to brand loyalty and it also requires a large capital outlay.

7.4.2 Kinked demand curve for the oligopolist

• One theory devised by an American economist, Paul Sweezy, can be used to determine the oligopolist’s demand curve.
• An oligopolist faces a kinked demand curve. This demand curve consists of two sections.
• The top section, the section that relates to high prices is a very elastic slope (i.e. demand is very sensitive to a price change.)
• The bottom section, the section that relates to lower prices is very inelastic (i.e. demand is not sensitive to a price change).
• Suppose the oligopolist is selling at the original/present price of R10 and 9 units of output are sold. Total revenue is R10 × 9 = R90
• If the firm tries to increase profit by increasing the price by R2 to R12, quantity demanded would fall to 2 units and total revenue would decrease to R24 (R12 × 2).
• If the firm tries to increase profit by reducing the price by R2 to R8 and increasing its total sales, total revenue would be R80.
• The oligopolist is therefore faced with a difficult decision because in both instances it will not benefit.
• Increasing the price of goods or reducing the price to increase sales will not lead to greater revenue earned.

7.4.3 Non-price competition

• Oligopoly firms are reluctant to change prices because a price war will drive prices down and profits will be eliminated.
• They make use of non-price measures to attract customers and increase their market share.
• An important aspect of non-price competition is to build brand loyalty, product recognition and product differentiation.
• This is done by means of advertising and marketing. As a result, oligopoly firms tend to spend a substantial amount of money on this.

Other forms of non-price competition include:

• extended shopping and business hours
• doing business over the internet
• after-sales services
• offering additional services
• loyalty rewards for customers
• door-to-door deliveries

Examples of firms that use kinds of non-price strategies are those in petrol retailing such as Shell, BP and Caltex and in the banking sector such as ABSA, FNB etc. 7.4.4 Collusion Collusion takes place when rival firms cooperate by raising prices and by restricting production in order to maximise their profits. When there is a formal agreement between firms to collude it is called a cartel. A cartel is a group of producers whose goal is to form a collective monopoly in order to fix prices and limit supply and competition. In general, cartels are economically unstable because there is a great incentive for members not to stick to the agreement, to cheat by cutting prices illegally and to sell more than the quotas set by the cartel. Although there is an incentive to collude there is also an incentive to compete. This has caused many cartels to be unsuccessful in the long term. Some well known cartels are the Organisation of Petroleum Exporting Countries(OPEC) and De Beers diamonds in South Africa. Overt/Formal collusion e.g. cartels are generally forbidden by law in most countries. However, they continue to exist nationally and internationally. Sometimes in an oligopoly market, a dominant firm will increase the price of a product in the hope that its rivals will see this as a signal to do the same. This is referred to as price leadership and is an example of a tacit collusion.

7.5 Monopolistic competition

7.5.1 Characteristics of monopolistic competition

• The products are differentiated. Products are similar but not identical. The are similar in that they satisfy the same need of the consumer. There may be differences in packaging but the product is the same. e.g. sugar and salt.
• Differentiated products create opportunities for non-price competition e.g. advertising.
• Monopolistic competition displays a hybrid structure. It is a combination of competition and a monopoly.
• There are many sellers.This indicates the element of competition.
• Entry into the market is easy.
• Businesses have little control over the price of the product. Each business sells at its own price since a single price cannot be determined for the differentiated product because a range of prices could apply.
• Information for buyers and sellers is incomplete.
• Collusion is not possible under monopolistic competition.
• Restaurants, plumbers, lawyers, insurance brokers, hairdressers, funeral parlours and estate agents are all examples of monopolistic competitors.

See nonprice competition for oligopolies on page 109. Some forms are similar for monopolistic competition. Make sure you can draw the graphs for the monopolistic competitor. 7.5.2 Non-price competition

• Differentiated products create opportunities for non-price competition i.e. competition is not based on prices but rather on factors relating to the product’s uniqueness.
• Advertising campaigns and further product differentiation are powerful forms of non-price competition.
• The greater the product differentiation the less price elastic the demand for the product will be.
• Large sums of money are spent on research, development and advertising to build a loyal consumer group.
• Therefore brands play a significant role in determining customer loyalty where a consumer may choose one producer over another. Large chain stores e.g. Checkers, Spar etc. have their own brands for some products. Most of these products are exactly the same as known brands.

7.5.3 Prices and production levels in the short-term and long-term

• The demand curve for a monopolistic competitor is similar that of a monopolist.
• Short term equilibrium (economic profit and economic loss) corresponds with a monopoly, but the demand curve is more price elastic (flatter) due to good substitutes.
• Long-term equilibrium is characterised by normal profit, due to the ease of entry and exit into the market (similar to a perfect market). The economic profit made in the short-term attracts more businesses to enter the market.

7.5.4 Comparison of monopolistic competition with perfect competition

• Both firms make normal profit in the long run. Therefore there is no difference in the long-run between the perfect market and the monopolistic market as far as profit is concerned.
• The equilibrium price is higher than in a perfect market. The consumer therefore pays less in the perfect market and more in the monopolistic market.
• The monopolistic competitor does not produce at the minimum of the LAC whereas the perfect competitor does. He is less efficient.
• The perfect competitor produces more at a lower price while the monopolistic competitor produces less at a higher price.

7.6 Summary of market structures

Activity 2 Complete the following table by filling in the missing information:

[20] Answer to activity 2

[20] Activity 3 Study the following graph and answer the questions that follow:

• Define the term imperfect market. (2)
• Motivate why the above graph indicates short-term equilibrium. (4)
• Which point on the graph indicates profit maximisation? (2)
• Calculate the economic profit. (6) [14]

Related items

• Mathematics Grade 12 Investigation 2023 Term 1
• TECHNICAL SCIENCES PAPER 2 GRADE 12 QUESTIONS - NSC PAST PAPERS AND MEMOS JUNE 2022
• TECHNICAL SCIENCES PAPER 1 GRADE 12 QUESTIONS - NSC PAST PAPERS AND MEMOS JUNE 2022
• MATHEMATICS LITERACY PAPER 2 GRADE 12 MEMORANDUM - NSC PAST PAPERS AND MEMOS JUNE 2022
• MATHEMATICS LITERACY PAPER 2 GRADE 12 QUESTIONS - NSC PAST PAPERS AND MEMOS JUNE 2022

Monopolistic Competition – definition, diagram and examples

Definition: Monopolistic competition is a market structure which combines elements of monopoly and competitive markets. Essentially a monopolistic competitive market is one with freedom of entry and exit, but firms can differentiate their products. Therefore, they have an inelastic demand curve and so they can set prices. However, because there is freedom of entry, supernormal profits will encourage more firms to enter the market leading to normal profits in the long term.

A monopolistic competitive industry has the following features:

• Many firms.
• Freedom of entry and exit.
• Firms produce differentiated products.
• Firms have price inelastic demand; they are price makers because the good is highly differentiated
• Firms make normal profits in the long run but could make supernormal profits in the short term
• Firms are allocatively and productively inefficient.

Diagram monopolistic competition short run

The firm maximises profit where MR=MC. This is at output Q1 and price P1, leading to supernormal profit

Monopolistic competition long run

In the long-run, supernormal profit encourages new firms to enter. This reduces demand for existing firms and leads to normal profit. I

Efficiency of firms in monopolistic competition

• Allocative inefficient. The above diagrams show a price set above marginal cost
• Productive inefficiency. The above diagram shows a firm not producing on the lowest point of AC curve
• Dynamic efficiency. This is possible as firms have profit to invest in research and development.
• X-efficiency. This is possible as the firm does face competitive pressures to cut cost and provide better products.

Examples of monopolistic competition

• Restaurants – restaurants compete on quality of food as much as price. Product differentiation is a key element of the business. There are relatively low barriers to entry in setting up a new restaurant.
• Hairdressers. A service which will give firms a reputation for the quality of their hair-cutting.
• Clothing. Designer label clothes are about the brand and product differentiation
• TV programmes – globalisation has increased the diversity of tv programmes from networks around the world. Consumers can choose between domestic channels but also imports from other countries and new services, such as Netflix.

Limitations of the model of monopolistic competition

• Some firms will be better at brand differentiation and therefore, in the real world, they will be able to make supernormal profit.
• New firms will not be seen as a close substitute.
• There is considerable overlap with oligopoly – except the model of monopolistic competition assumes no barriers to entry. In the real world, there are likely to be at least some barriers to entry
• If a firm has strong brand loyalty and product differentiation – this itself becomes a barrier to entry. A new firm can’t easily capture the brand loyalty.
• Many industries, we may describe as monopolistically competitive are very profitable, so the assumption of normal profits is too simplistic.

Key difference with monopoly

In monopolistic competition there are no barriers to entry. Therefore in long run, the market will be competitive, with firms making normal profit.

Key difference with perfect competition

In Monopolistic competition, firms do produce differentiated products, therefore, they are not price takers (perfectly elastic demand). They have inelastic demand.

New trade theory and monopolistic competition

New trade theory places importance on the model of monopolistic competition for explaining trends in trade patterns. New trade theory suggests that a key element of product development is the drive for product differentiation – creating strong brands and new features for products. Therefore, specialisation doesn’t need to be based on traditional theories of comparative advantage, but we can have countries both importing and exporting the same good. For example, we import Italian fashion labels and export British fashion labels. To consumers, the importance is the choice of goods.

Readers Question : if all firms in a monopolistic competitive industry were to merge would that firm produce as many different brands or just one brand?

Interesting question. I think it is an open-ended question with many different possibilities. One approach is to think how firms in different industries may behave if they did merge. Bearing in mind the model of monopolistic competition doesn’t always stand up to scrutiny too well in the real world.

If the firms merged together, there is no certainty how they would behave.

In some industries, it makes sense to have many differentiated brands creating an illusion of competition and providing a barrier to entry.

How many soap powders are there? About 35. But, most of these brands are owned by two companies, Unilever and Proctor and Gamble. Having brand proliferation means it is harder for a new firm to enter the market. This is because a new firm would have to compete against 30 established brands as opposed to 2. There is less chance of getting a good market share with so many brands. Therefore the new firm would have an incentive to keep different brands to deter competitors.

However, if you have merge different brands there may be economies of scale. You can devote more resources and investment to improving that particular product and maximising its efficiency. This might be appropriate for an industry like computer software or computers. There used to be many different brands of computers until the pc came to dominate.

Are the different brands catering to different sectors of the market. If you take the restaurant business, there is a big difference between Chinese and Indian. If 2 restaurants merge, they would be better off retaining distinct business. It would make no sense to have a restaurant which offered a mixture of Chinese/Indian – consumers would trust it less.

If you fear the arrival of a powerful company, it might be good to consolidate your brands. For example, there are many small search engines, but they would be better off combining forces to compete against the mighty Google.

43 thoughts on “Monopolistic Competition – definition, diagram and examples”

Was requesting for economic restrictions for monopolistic competition

All great actions and thoughts have a negligible beginning.

I work hard, I insist, I will succeed

Thanks a lot sir you explain easily the topic and this is very helpful for me

it was helpful kindly send some more important information to my gmail, will appreciate

why is not possible for monopoly to exist to a large extent in agriculture?

hello sir, Could you please tell me that which theme you uses ?

Explain the dertemination of the optimal price and output combination in a monopolistic competition.use the resulting equilibrium to illustrate the statement that ‘production inefficient is a necessary price to pay for product variety’ comment on this statement (25)

hi, how is a monopolistic competition different from monopoly? thanks

In monopolistic competition there are no barriers to entry. Theoretically, if firms have no barriers to entry or exit, there will be mass competition as everyone wants to get a piece of the super normal profit. If this happens, there will be decreased demand for a specific product or service, as theres more substitue goods. leading to firms in monopolistic competition acheiving normal profit in the long run. Whereas with monopolies, the low competition means they control supply, without the threat of competition offering more supply to boost market cap and sales, leading to them being able to keep demand constant and acheive supernormal profits in both the long and short run.

Monopoly cannot exist in large extent in agriculture because the Monopoly you are talking about is short run

I’m happy to have learnt something new

Comments are closed.

Live revision! Join us for our free exam revision livestreams Watch now →

Reference Library

Collections

• See what's new
• All Resources
• Student Resources
• Assessment Resources
• Teaching Resources
• CPD Courses
• Livestreams

Study notes, videos, interactive activities and more!

Economics news, insights and enrichment

Currated collections of free resources

Browse resources by topic

• All Economics Resources

Resource Selections

Currated lists of resources

Study Notes

Monopolistic Competition

Last updated 2 Jul 2018

• Share on Facebook
• Share on Twitter
• Share by Email

Monopolistic competition is a form of imperfect competition and can be found in many real world markets ranging from clusters of sandwich bars, other fast food shops and coffee stores in a busy town centre to pizza delivery businesses in a city or hairdressers in a local area.

• Monopolistic competition
• Non-Price Competition
• Product Differentiation
• Contestable Markets
• Market structure

You might also like

Perfect competition - adjusting to long run equilibrium, perfect competition.

Topic Videos

Spotify in talks to acquire SoundCloud

30th September 2016

Paperbacks Fight Back!

19th March 2017

Price Wars in Oligopoly - Examples and Evaluation

Cma argues that google and facebook have too much market power.

3rd July 2020

Tesco Raises Prices for Meal Deals

22nd October 2022

CMA launches probe into prices of baby formula

29th November 2023

Our subjects

• › Criminology
• › Economics
• › Geography
• › Health & Social Care
• › Psychology
• › Sociology
• › Teaching & learning resources
• › Student revision workshops
• › Online student courses
• › CPD for teachers
• › Livestreams
• › Teaching jobs

Boston House, 214 High Street, Boston Spa, West Yorkshire, LS23 6AD Tel: 01937 848885

• › Contact us
• › Terms of use
• › Privacy & cookies

© 2002-2024 Tutor2u Limited. Company Reg no: 04489574. VAT reg no 816865400.

Essay on Monopolistic Competition

In this essay we will discuss about Monopolistic Competition. After reading this essay you will learn about: 1. Meaning of Monopolistic Competition 2. Price Determination of a Firm under Monopolistic Competition 3. Chamberlin’s Group Equilibrium 4. Theory of Excess Capacity 5. Selling Costs 6. Wastes of Monopolistic Competition.

• Essay on the Meaning of Monopolistic Competition
• Essay on the Price Determination of a Firm under Monopolistic Competition
• Essay on Chamberlin’s Group Equilibrium
• Essay on Theory of Excess Capacity
• Essay on the Selling Costs
• Essay on Wastes of Monopolistic Competition

Essay # 1. Meaning of Monopolistic Competition:

Monopolistic competition refers to a market situation where there are many firms selling a differentiated product. “There is competition which is keen, though not perfect, among many firms making very similar products.”

No firm can have any perceptible influence on the price-output policies of the other sellers nor can it be influenced much by their actions. According to Salvatore, “Monopolistic competition refers to the market organisation in which there are many firms selling closely related but not identical commodities.”

ADVERTISEMENTS:

Products are close substitutes with a high cross-elasticity and not perfect substitutes, Tata, Lipton, etc. tea; Hamam, Lux etc. soap; Pepsi, Coca Cola, etc. cold drinks are examples of product differentiation. Under monopolistic competition, no single firm controls more than a small portion of the total output of a product.

As the products are close substitutes, a reduction in the price of a product will increase the sales of the firm but it will have little effect on the price-output conditions of other firms, each will lose only a few of its customers. Likewise, an increase in its price will reduce its demand substantially but each of its rivals will attract only a few of its customers.

Therefore, the demand curve (average revenue curve) of a firm under monopolistic competition slopes downward to the right. It is elastic but not perfectly elastic within a relevant range of price at which he can sell any amount.

It means that it has some control over price due to product differentiation and there are price differentials between firms. Despite this, the slope of the demand curve is determined by the general level of the market price for the differentiated product.

In so far as it exercises some control over price, it resembles monopoly and since its demand curve is affected by market conditions, it resembles pure competition. Such a situation is, therefore, characterised as monopolistic competition.

Essay # 2. Price Determination of a Firm under Monopolistic Competition:

The equilibrium of the firm under monopolistic competition follows the usual analysis in the short-run and long-run.

(A) Short-Run Equilibrium Assumptions :

The short-run analysis of the firm under monopolistic competition is based on the following assumptions:

(1) The number of sellers is large and they act independently of each other. Each is a monopolist in his own sphere;

(2) The product of each seller is differentiated from the other products;

(3) The firm has a determinate demand curve (AR) which is elastic;

(4) The factor-services are in perfectly elastic supply for the production of the product in question;

(5) The short-run cost curves of each firm differ from each other; and

(6) No new firms enter the industry.

Explanation:

Given these assumptions, each firm fixes such price and output which maximises its profits. The equilibrium price and output is determined at a point where the short-run marginal cost curve (SMC) cuts the marginal revenue (MR) curve from below.

Since costs differ in the short-run, a firm with lower unit costs will be earning only normal profits. In case, it is able to cover just the average variable cost, it incurs losses.

In Figure 1 (A) the short-run marginal cost curve (SMC) cuts the MR curve at E. This equilibrium point establishes the price QA (=OP) and output OQ. As a result, the firm earns supernormal profits represented by the shaded area PABC.

Figure 1 (B) indicates the same equilibrium point of price and output. But in this case the firm just covers the short-run average unit cost as represented by the tangency of demand curve D and the short-run average unit cost curve SAC at A. It earns normal profits.

Figure 1 (C) shows a situation where the firm is not able to cover its short-run average unit cost and therefore incurs losses. Price set by the equality of SMC and MR curves is QA which covers only the average variable cost.

The tangency of the demand curve D and the average variable cost curve A VC at A makes it a shut-down point. If the firm lowers the price below QA, it will have to stop further production. However at this price, the firm will incur losses equal to the area CBAP during the short-run in the hope of lowering its costs in the long-run.

Presentations made painless

• Get Premium

119 Monopolistic Competition Essay Topic Ideas & Examples

Inside This Article

Monopolistic competition is a market structure in which many firms sell products that are similar but not identical. This type of competition can lead to a wide range of essay topics that explore the dynamics of this unique market structure. Here are 119 monopolistic competition essay topic ideas and examples to help you get started:

• The role of advertising in monopolistic competition
• Price discrimination in monopolistic competition markets
• Product differentiation and brand loyalty in monopolistic competition
• The impact of entry and exit barriers on monopolistic competition markets
• The effects of government regulations on monopolistic competition
• How monopolistic competition affects consumer choice
• The role of technology in shaping monopolistic competition markets
• The relationship between market power and market concentration in monopolistic competition
• The impact of globalization on monopolistic competition markets
• The role of innovation in driving monopolistic competition
• The effects of economies of scale on monopolistic competition markets
• The relationship between monopolistic competition and market power
• The impact of mergers and acquisitions on monopolistic competition markets
• The effects of pricing strategies on monopolistic competition markets
• How monopolistic competition affects the distribution of income
• The role of government intervention in monopolistic competition markets
• The impact of market structure on monopolistic competition
• The relationship between monopolistic competition and market failures
• The role of consumer preferences in shaping monopolistic competition markets
• The effects of advertising on monopolistic competition markets
• The impact of entry barriers on monopolistic competition markets
• The relationship between product differentiation and market power in monopolistic competition
• The effects of technological change on monopolistic competition markets
• The role of entry costs in monopolistic competition markets
• The impact of exit barriers on monopolistic competition markets
• The effects of government regulations on monopolistic competition markets
• The relationship between market concentration and market power in monopolistic competition
• The role of innovation in driving monopolistic competition markets

These essay topic ideas and examples can help you explore the complexities of monopolistic competition and its impact on various aspects of the economy. Whether you are studying economics, business, or any other related field, these topics can provide a solid foundation for your research and analysis. Happy writing!

Want to create a presentation now?

Instantly Create A Deck

Let PitchGrade do this for me

Hassle Free

We will create your text and designs for you. Sit back and relax while we do the work.

Explore More Content

• Privacy Policy
• Terms of Service

© 2023 Pitchgrade

• school Campus Bookshelves
• menu_book Bookshelves
• perm_media Learning Objects
• login Login
• how_to_reg Request Instructor Account
• hub Instructor Commons

Margin Size

• Download Page (PDF)
• Download Full Book (PDF)
• Periodic Table
• Physics Constants
• Scientific Calculator
• Reference & Cite
• Tools expand_more
• Readability

selected template will load here

This action is not available.

12.1: Introduction to Oligopolies

• Last updated
• Save as PDF
• Page ID 48456

\( \newcommand{\vecs}[1]{\overset { \scriptstyle \rightharpoonup} {\mathbf{#1}} } \)

\( \newcommand{\vecd}[1]{\overset{-\!-\!\rightharpoonup}{\vphantom{a}\smash {#1}}} \)

\( \newcommand{\id}{\mathrm{id}}\) \( \newcommand{\Span}{\mathrm{span}}\)

( \newcommand{\kernel}{\mathrm{null}\,}\) \( \newcommand{\range}{\mathrm{range}\,}\)

\( \newcommand{\RealPart}{\mathrm{Re}}\) \( \newcommand{\ImaginaryPart}{\mathrm{Im}}\)

\( \newcommand{\Argument}{\mathrm{Arg}}\) \( \newcommand{\norm}[1]{\| #1 \|}\)

\( \newcommand{\inner}[2]{\langle #1, #2 \rangle}\)

\( \newcommand{\Span}{\mathrm{span}}\)

\( \newcommand{\id}{\mathrm{id}}\)

\( \newcommand{\kernel}{\mathrm{null}\,}\)

\( \newcommand{\range}{\mathrm{range}\,}\)

\( \newcommand{\RealPart}{\mathrm{Re}}\)

\( \newcommand{\ImaginaryPart}{\mathrm{Im}}\)

\( \newcommand{\Argument}{\mathrm{Arg}}\)

\( \newcommand{\norm}[1]{\| #1 \|}\)

\( \newcommand{\Span}{\mathrm{span}}\) \( \newcommand{\AA}{\unicode[.8,0]{x212B}}\)

\( \newcommand{\vectorA}[1]{\vec{#1}}      % arrow\)

\( \newcommand{\vectorAt}[1]{\vec{\text{#1}}}      % arrow\)

\( \newcommand{\vectorB}[1]{\overset { \scriptstyle \rightharpoonup} {\mathbf{#1}} } \)

\( \newcommand{\vectorC}[1]{\textbf{#1}} \)

\( \newcommand{\vectorD}[1]{\overrightarrow{#1}} \)

\( \newcommand{\vectorDt}[1]{\overrightarrow{\text{#1}}} \)

\( \newcommand{\vectE}[1]{\overset{-\!-\!\rightharpoonup}{\vphantom{a}\smash{\mathbf {#1}}}} \)

What you’ll learn to do: describe and analyze oligopolies

Most of the firms that get talked about as “monopolies” today or that regulatory authorities pursue antitrust activities against are actually oligopolies, firms that have only a limited number of competitors. There are quite a few industries in the U.S. that are oligopolistic. Think about rental cars, or car manufacturers, or newspapers, or internet service providers.

In this section, you will learn what oligopolies are and why they exist. You’ll read about how some oligopolies are motivated to work together and collude to ensure higher profits, while others compete and act more like perfect competitors.

• Introduction to Oligopolies. Authored by : Steven Greenlaw and Lumen Learning. License : CC BY: Attribution
• This is the new logo for Frontier Communications.. Authored by : Frontier Communications. Provided by : Wikimedia. Located at : https://commons.wikimedia.org/wiki/File:New-frontier-logo.png . License : Public Domain: No Known Copyright
• Logo of Comcast. Authored by : Comcast. Provided by : Wikimedia. Located at : https://commons.wikimedia.org/wiki/File:Comcast_Logo.svg . License : Public Domain: No Known Copyright

• school Campus Bookshelves
• menu_book Bookshelves
• perm_media Learning Objects
• login Login
• how_to_reg Request Instructor Account
• hub Instructor Commons

Margin Size

• Download Page (PDF)
• Download Full Book (PDF)
• Periodic Table
• Physics Constants
• Scientific Calculator
• Reference & Cite
• Tools expand_more
• Readability

selected template will load here

This action is not available.

12: Monopolistic Competition

• Last updated
• Save as PDF
• Page ID 3511

\( \newcommand{\vecs}[1]{\overset { \scriptstyle \rightharpoonup} {\mathbf{#1}} } \)

\( \newcommand{\vecd}[1]{\overset{-\!-\!\rightharpoonup}{\vphantom{a}\smash {#1}}} \)

\( \newcommand{\id}{\mathrm{id}}\) \( \newcommand{\Span}{\mathrm{span}}\)

( \newcommand{\kernel}{\mathrm{null}\,}\) \( \newcommand{\range}{\mathrm{range}\,}\)

\( \newcommand{\RealPart}{\mathrm{Re}}\) \( \newcommand{\ImaginaryPart}{\mathrm{Im}}\)

\( \newcommand{\Argument}{\mathrm{Arg}}\) \( \newcommand{\norm}[1]{\| #1 \|}\)

\( \newcommand{\inner}[2]{\langle #1, #2 \rangle}\)

\( \newcommand{\Span}{\mathrm{span}}\)

\( \newcommand{\id}{\mathrm{id}}\)

\( \newcommand{\kernel}{\mathrm{null}\,}\)

\( \newcommand{\range}{\mathrm{range}\,}\)

\( \newcommand{\RealPart}{\mathrm{Re}}\)

\( \newcommand{\ImaginaryPart}{\mathrm{Im}}\)

\( \newcommand{\Argument}{\mathrm{Arg}}\)

\( \newcommand{\norm}[1]{\| #1 \|}\)

\( \newcommand{\Span}{\mathrm{span}}\) \( \newcommand{\AA}{\unicode[.8,0]{x212B}}\)

\( \newcommand{\vectorA}[1]{\vec{#1}}      % arrow\)

\( \newcommand{\vectorAt}[1]{\vec{\text{#1}}}      % arrow\)

\( \newcommand{\vectorB}[1]{\overset { \scriptstyle \rightharpoonup} {\mathbf{#1}} } \)

\( \newcommand{\vectorC}[1]{\textbf{#1}} \)

\( \newcommand{\vectorD}[1]{\overrightarrow{#1}} \)

\( \newcommand{\vectorDt}[1]{\overrightarrow{\text{#1}}} \)

\( \newcommand{\vectE}[1]{\overset{-\!-\!\rightharpoonup}{\vphantom{a}\smash{\mathbf {#1}}}} \)