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Monopolistic Competition Perfect Competition

Monopolistic competition is a market structure with many firms that produce differentiated products. While there are no barriers to entry or exit as in perfect competition, firms under monopolistic competition differentiate their products and try to increase market share through differentiation. The price charged is not socially optimal as firms have some control over pricing unlike perfect competition.

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0% found this document useful (0 votes)
29 views1 page

Monopolistic Competition Perfect Competition

Monopolistic competition is a market structure with many firms that produce differentiated products. While there are no barriers to entry or exit as in perfect competition, firms under monopolistic competition differentiate their products and try to increase market share through differentiation. The price charged is not socially optimal as firms have some control over pricing unlike perfect competition.

Uploaded by

Christelle
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Monopolistic Competition

Perfect Competition
 No barriers to entry and exit of firms.
 No barriers for firms to enter or exit.
 A very large number of firms are present.
 A very large number of firms are present in the market.
 Not all products are homogeneous therefore product
 All firms produce homogeneous products, therefore no product differentiation takes.
differentiation.
 Producers try to increase their market share by differentiating
 All firms are price takers, not price setters. their products.
 It is an ideal and most efficient market as prices are as lowest  The price charged by the producer is not a socially optimal
as possible. price.

All of them are competitive behaviors of a


company.
Oligopoly
 There is more than one firm in the industry
but not as large as in perfect competition
and monopolistic market that is a number
Monopoly of firms can be counted for example 4,5,6,7
and others.
 There is only one supplier in the market.  There are barriers to the entry and exit of
 There are barriers to the entry and exit of firms. firms.
 The firm is a price setter therefore it set price as high  Firms are price setters.
as possible.  Firms try to compete with each other by
 Monopoly does not have a supply curve. reducing prices and gaining more market
 The price charged is much above the socially optimal share. But still, price is above socially
price. optimal price.

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