Download Monopolistic Competition

Monopolistic Competition
王美薇
马如雪
刘忠乔
高 颖
35 宋 佳 28
20 陆 琴 38
19 徐 倩 29
12
Contents
 Monopolistic
Competition
 Monopolistic
Competition in the Short
Run
 Monopolistic
Competition in the Long
Run
 Nonprice
Competition
Monopolistic Competition
王美薇
35
Monopolistic Competition
Monopolistic Competition
Hotels
Food markets
Exterminators
Monopolistic Competition
Definition:
Monopolistic competition is a type of
imperfect competition(不完全竞争) such
that many producers sell products that are
differentiated from one another(e.g. by
branding or quality) and hence are not
perfect substitutes.
Monopolistic Competition
Monopolistic competition as a market
structure was first identified in the 1930s by
American economist Edward Chamberlin,
and English economist Joan Robinson.
Monopolistic Competition
A monopolistically competitive market
has three fundamental characteristics:
 many
 no
buyers and sellers;
significant barriers to entry or exit;
 differentiated
products.
Monopolistic Competition
Note that monopolistic competition
combines some features of both pure
competition and monopoly—hence its
name.
What makes a product differentiated?
宋佳
28
What makes a product differentiated?
1.Quality
eg:Toyota（丰田） and Volkswagen （大
众）
Hilton (希尔顿酒店) and Motel 6. （6
号汽车旅馆）
What makes a product differentiated?
2.A matter of taste
eg:Colgate toothpaste(高露洁牙膏)
and
Crest toothpaste(佳洁士牙膏)
What makes a product differentiated?
3.Location
eg: bookstore---closer to your home or
office
What makes a product differentiated?
Attentions
Product differentiation is a subjectve(主观
的) matter。
The reason for the downward slope may
be a difference in product quality,
consumer tastes, or location，or it may be
entirely illusory(因错觉产生的).
Monopolistic Competition in the Short Run
马如雪
20
Monopolistic Competition
constriants
technology
price
demand
curve
Monopolistic Competitor
Monopoly
垄断者
monopoly:the
only seller
monopolistic
competitor: one
of many sellers
Monopoly
product
pay up
OR
less of the
goods
price
monopolistic competitor
raise price
hold price
similar goods
Result：a given rise in price
should cause a greater fall in
quantity demanded
Monopolistic Competition in the Long Run
陆琴
徐倩
38
29
Monopolistic Competition in the
Long Run
Under monopolistic competition-in which
there are no barriers to entry and exit -the
firm will not enjoy its profit for long.
1
price
2
1
2
price : not change
the demand curve : it
faces will shift
leftward
Entry will continue to
occur, and the
demand curve will
quantity continue to shift
leftward.------earning
zero economic profit.
we can also reverse these steps.
2
1
the demand curve will shift rightward
exit will cease only when the typical
firm is earning zero economic profit.
profit
loss
Monopolistic
competitors
In short run
In long run
Earn zero
economic
profit
New entrants
Industry shakeout
Enough
accountin
g profit
Cover
the
implicit
cost
The owners
have time
and money
to some
alternative
enterprise
添加文本
Markets
adjust from
short-run to
long-run
Springing up
A certain kind of business
disappearing
Another kind of business
Nonprice Competition
刘忠乔
19
高
12
颖
Nonprice Competition
非价格竞争
Any action a firm takes to increase the
demand for its output-other than cutting
its price-is called nonprice competition.
better services
Examples
of nonprice
competition:
product guarantees
free home delivery
more attractive packaging
advertising to inform
customers
e.g. fast-food restaurants
Burger King:We are better because we
make your burgers to order.
McDonald's:Our staff is better looking and
more upbeat than Burger King's.
monopolistic
competitors
→
zero economic profit
nonprice
competition
(
P
)
需求
曲线
供给
曲线
(
Q)
offer better service or more clever
advertising.(in short run)
other innovative firms will
experience leftward shift
If:product
guarantees
advertising
offer the product guarantees
start ad campaigns
earn economic prof
In the long run,we expect all
monopolistic competitors
to run advertisements,
to be concerned about service
 All
this nonprice competition is costly:
 pay
for advertising,
 for
product guarantees,
 for
better staff training.
 But
this does not change any of our
conclusions about monopolistic
competition in the long run.
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