Monopolistic competition - Theme 3

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  • Created by: Yzaman
  • Created on: 25-02-18 20:12

Monopolisitic competition

  • Many small firms
  • Similar goods, slightly differentiated
  • Imperfect knowledge
  • Low barriers to entry/exit
  • Price makers

Advantages:

  • More choice for consumers
  • Allocatively inefficent in short and long run (P>MC)
  • Model more realistic than perfect competition
  • Supernormal profits produced in…

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