Monopolistic competition is a type of imperfect competition such that many producers sell products that are differentiated from one another (e.g. by branding or quality) and hence are not perfect substitutes. In monopolistic competition, a firm takes the prices charged by its rivals as given and ignores the impact of its own prices on the prices of other firms.[1][2] In the presence of coercive government, monopolistic competition will fall into government-granted monopoly. Unlike perfect competition, the firm maintains spare capacity. Models of monopolistic competition are often used to model industries. Textbook examples of industries with market structures similar to monopolistic competition include restaurants, cereal, clothing, shoes, and service industries in large cities. The "founding father" of the theory of monopolistic competition is Edward Hastings Chamberlin, who wrote a pioneering book on the subject, Theory of Monopolistic Competition (1933).[3] Joan Robinson published a book The Economics of Imperfect Competition with a comparable theme of distinguishing perfect from imperfect competition.
Monopolistically competitive markets have the following characteristics:
There are many producers and many consumers in the market, and no business has total control over the market price.
Consumers perceive that there are non-price differences among the competitors' products.
There are few barriers to entry and exit.[4]
Producers have a degree of control over price.
economics #ucp
What is 'Monopolistic Competition'
Characterizes an industry in which many firms offer products or services that are similar, but not perfect substitutes. Barriers to entry and exit in the industry are low, and the decisions of any one firm do not directly affect those of its competitors. All firms have the same, relatively low degree of market power; they are all price makers. In the long run, demand is highly elastic, meaning that it is sensitive to price changes. In the short run, economic profit is positive, but it approaches zero in the long run. Firms in monopolistic competition tend to advertise heavily.
BREAKING DOWN 'Monopolistic Competition'
Monopolistic competition is a middle ground between monopoly, on the one hand, and perfect competition (a purely theoretical state), on the other, and combines elements of each. It is a form of competition that characterizes a number of industries that are familiar to consumers in their day-to-day lives. Examples include restaurants, hair salons, clothing and consumer electronics. To illustrate the characteristics of monopolistic competition, we'll use the example of household cleaning products.
Students should be able to:
Carry out diagrammatic analysis of the market structure in both the short and long run
Understand the importance of advertising and differentiation for the model of monopolistic competition and be able to contrast this with other market structures.
Students should be able to explain and evaluate the efficiency of monopolistic competition
Students should be able to:
Carry out diagrammatic analysis of the market structure in both the short and long run
Understand the importance of advertising and differentiation for the model of monopolistic competition and be able to contrast this with other market structures.
Students should be able to explain and evaluate the efficiency of monopolistic competition
This PPT includes Oligopoly Market. It is explained in detail.
This is for educational purpose only. If you own any of the content please let me know. We are not here to hurt anyone's emotion. Please try to co-operate and use this for educational purposes only.
Topic is useful for BA, BCOm, BBA, MCom, MA Eco, and 12 class students.For listening lecture kindly open you tube link
https://www.youtube.com/watch?v=vVxFp2TOuoU
Models of Oligopoly
Cournot’s duopoly model
Sweezy’s kinked demand curve model
Price leadership models
Collusive models :The Cartel Arrangement
The Game Theory
Prisoner’s Dilemma
Price leadership Model
Collusive models The Cartel Arrangement
This PPT includes Oligopoly Market. It is explained in detail.
This is for educational purpose only. If you own any of the content please let me know. We are not here to hurt anyone's emotion. Please try to co-operate and use this for educational purposes only.
Topic is useful for BA, BCOm, BBA, MCom, MA Eco, and 12 class students.For listening lecture kindly open you tube link
https://www.youtube.com/watch?v=vVxFp2TOuoU
Models of Oligopoly
Cournot’s duopoly model
Sweezy’s kinked demand curve model
Price leadership models
Collusive models :The Cartel Arrangement
The Game Theory
Prisoner’s Dilemma
Price leadership Model
Collusive models The Cartel Arrangement
Drop Shipping in the Q-Commerce Era, A case study of Daraz. pk | Project by F...FaHaD .H. NooR
Drop Shipping in the Q-Commerce Era, A case study of Daraz. pk | Project by FAHAD HASSAN NOOR under observation by Mustafa Hannan Mehboob | UCP University Of Central PUNJAB
The research project considered dropshipping in the Q-commerce era in our national setting as
Pakistan's E-commerce industry is evolving, and the supply chain structure of Daraz.pk is
exactly the phenomenon to be studied. The article acknowledges that more entrepreneurs are
turning to dropship, which is market-driven and a way for entrepreneurs with little cash to set
into an e-commerce business. The importance of dropshipping as an instrument that dismantles
retailers from stock and warehouse concerns is emphasized here. The effort is shifted to
marketing and customer acquisition. This research will be about analyzing what Q-commerce –
assumed to be a non-conforming model that conforms to modern consumers’ demands of
instant service– has done to the economies and the dynamics in Pakistan.
Operations Management A-Z: Business Processes and Systems | Fahad Hassan NoorFaHaD .H. NooR
This certificate above verifies that Fahad Hassan Noor successfully completed the course Operations Management A-Z: Business Processes and Systems on 05/12/2022 as taught by Laurence Gartside, Rowtons Training on Udemy. The certificate indicates the entire course was completed as validated by the student. The course duration represents the total video hours of the course at time of most recent completion.
This certificate above verifies that Fahad Hassan Noor successfully completed the course Supply Chain Management A-Z: Operations & Logistics Basics on 01/16/2022 as taught by Laurence Gartside, Rowtons Training on Udemy. The certificate indicates the entire course was completed as validated by the student. The course duration represents the total video hours of the course at time of most recent completion.
Inventory Management A-Z: Supply Chain & Business Operations | Fahad Hassan N...FaHaD .H. NooR
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This certificate above verifies that Fahad Hassan Noor successfully completed the course Supply Chain Management A-Z: Operations & Logistics Basics on 01/16/2022 as taught by Laurence Gartside MEng Cantab on Udemy. The certificate indicates the entire course was completed as validated by the student. The course duration represents the total video hours of the course at time of most recent completion.
Facebook Ads & Facebook Marketing MASTERY | Coursenvy ® - Fahad Hassan Noor -...FaHaD .H. NooR
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Training for Zendesk Administrators MasterClass - Fahad Hassan NoorFaHaD .H. NooR
This certificate above verifies that Fahad Hassan Noor successfully completed the course Training for Zendesk Administrators on 01/04/2022 as taught by Guidoo Services, Nils Rebehn on Udemy. The certificate indicates the entire course was completed as validated by the student. The course duration represents the total video hours of the course at time of most recent completion.
TikTok Marketing: Grow Your Account & Master TikTok Ads - Fahad Hassan NoorFaHaD .H. NooR
This certificate above verifies that Fahad Hassan Noor successfully completed the course TikTok Marketing 2021: Grow Your Account & Master TikTok Ads on 07/29/2020 as taught by Darius Mora, Evan Kimbrell on Udemy. The certificate indicates the entire course was completed as validated by the student. The course duration represents the total video hours of the course at time of most recent completion.
Amazon FBA Private Label Course for Beginners | Amazon 2022 - Fahad Hassan NoorFaHaD .H. NooR
This certificate above verifies that Fahad Hassan Noor successfully completed the course Amazon FBA Private Label Course for Beginners | Amazon 2021 on 12/06/2020 as taught by Mehmet TEK, Esengül AKPOLAT, Emparazon Academy on Udemy. The certificate indicates the entire course was completed as validated by the student. The course duration represents the total video hours of the course at time of most recent completion.
Complete Video Production, Video Marketing, & YouTube Course - Fahad Hassan NoorFaHaD .H. NooR
This certificate above verifies that Fahad Hassan Noor successfully completed the course Complete Video Production, Video Marketing, & YouTube Course on 09/05/2021 as taught by Ing. Tomas Moravek | SEO, Facebook Ads & Facebook Marketing Expert, SEO, Facebook Ads & Digital Marketing Academy, Beck Robertson on Udemy. The certificate indicates the entire course was completed as validated by the student. The course duration represents the total video hours of the course at time of most recent completion.
While many firms are part of supply chain not all are managed in any truly coordinated fashion.
Many firms within supply chain wants to work independently.
Firms with large system inventories, many suppliers, complex product assemblies and highly valued customers benefit most from the practice of supply chain management.
For these firms, even moderate supply chain management success can mean lower purchasing and inventory carrying costs, better product quality and higher levels of customer service—all leading to more sales.
Creating and Managing Supplier RelationshipsFaHaD .H. NooR
Companies require their suppliers to deliver innovative and quality products not only in just-in-time (JIT) fashion, but also at a competitive price.
Good supplier relations can provide many benefits such as flexibility in terms of delivery, better quality, better information, and better material flows between buyers and suppliers.
Selecting the right supply partners and successfully managing these relationships over time is thus strategically important; it is often stated that “a firm is only as good as its suppliers.”
Purchasing departments contributes in product design, quality, cost of goods sold, manufacturing cycle time.
Ethical and Sustainable sourcing practices have become area of concern over the past five to ten years.
Global population growth, increasing environmental awareness, consumers desires for better corporate responsibility, and declining worldwide levels of natural resources has pressured companies to effectively implement these practices.
Purchasing mangement - Puchasing Process - Make Or Buy Decisions - Supplier S...FaHaD .H. NooR
Purchasing department in any organization assist with the identification, selection and acquisition of required materials and services.
Accomplish this as economically as possible, within acceptable standards of quality and service.
“Purchasing profession can be defined as the act of obtaining merchandise; equipment; raw materials; services; or maintenance, repair and operating (MRO) supplies in exchange for money or its equivalent”.
The Rise of Generative AI in Finance: Reshaping the Industry with Synthetic DataChampak Jhagmag
In this presentation, we will explore the rise of generative AI in finance and its potential to reshape the industry. We will discuss how generative AI can be used to develop new products, combat fraud, and revolutionize risk management. Finally, we will address some of the ethical considerations and challenges associated with this powerful technology.
Financial Assets: Debit vs Equity Securities.pptxWrito-Finance
financial assets represent claim for future benefit or cash. Financial assets are formed by establishing contracts between participants. These financial assets are used for collection of huge amounts of money for business purposes.
Two major Types: Debt Securities and Equity Securities.
Debt Securities are Also known as fixed-income securities or instruments. The type of assets is formed by establishing contracts between investor and issuer of the asset.
• The first type of Debit securities is BONDS. Bonds are issued by corporations and government (both local and national government).
• The second important type of Debit security is NOTES. Apart from similarities associated with notes and bonds, notes have shorter term maturity.
• The 3rd important type of Debit security is TRESURY BILLS. These securities have short-term ranging from three months, six months, and one year. Issuer of such securities are governments.
• Above discussed debit securities are mostly issued by governments and corporations. CERTIFICATE OF DEPOSITS CDs are issued by Banks and Financial Institutions. Risk factor associated with CDs gets reduced when issued by reputable institutions or Banks.
Following are the risk attached with debt securities: Credit risk, interest rate risk and currency risk
There are no fixed maturity dates in such securities, and asset’s value is determined by company’s performance. There are two major types of equity securities: common stock and preferred stock.
Common Stock: These are simple equity securities and bear no complexities which the preferred stock bears. Holders of such securities or instrument have the voting rights when it comes to select the company’s board of director or the business decisions to be made.
Preferred Stock: Preferred stocks are sometime referred to as hybrid securities, because it contains elements of both debit security and equity security. Preferred stock confers ownership rights to security holder that is why it is equity instrument
<a href="https://www.writofinance.com/equity-securities-features-types-risk/" >Equity securities </a> as a whole is used for capital funding for companies. Companies have multiple expenses to cover. Potential growth of company is required in competitive market. So, these securities are used for capital generation, and then uses it for company’s growth.
Concluding remarks
Both are employed in business. Businesses are often established through debit securities, then what is the need for equity securities. Companies have to cover multiple expenses and expansion of business. They can also use equity instruments for repayment of debits. So, there are multiple uses for securities. As an investor, you need tools for analysis. Investment decisions are made by carefully analyzing the market. For better analysis of the stock market, investors often employ financial analysis of companies.
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2. The Four Types of Market Structure
Monopoly Oligopoly Monopolistic
Competition
Perfect
Competition
• Tap
water
• Cable TV
• Tennis
balls
• Crude oil
• Novels
• Movies
• Wheat
• Milk
Number of Firms?
Type of Products?
Many
firms
One
firm Few
firms Differentiated
products
Identical
products
3. Types of Imperfectly Competitive Markets
Monopolistic Competition
Many firms selling products that are similar but
not identical.
Oligopoly
Only a few sellers, each offering a similar or
identical product to the others.
6. Many Sellers
There are many firms competing for the same
group of customers.
Product examples include books, CDs,
movies, computer games, restaurants,
piano lessons, cookies, furniture, etc.
7. Product Differentiation
Each firm produces a product that is at
least slightly different from those of
other firms.
Rather than being a price taker, each
firm faces a downward-sloping
demand curve.
8. Free Entry or Exit
Firms can enter or exit the market
without restriction.
The number of firms in the market
adjusts until economic profits are zero.
9. Monopolistic Competitors in the Short
Run...
(a) Firm Makes a Profit
Quantity0
Price
Demand
MR
ATC
Profit
MC
Profit-
maximizing quantity
Price
Average
total cost
10. Monopolistic Competitors in the Short
Run...
Quantity0
Price
Demand
MR
Losses
(b) Firm Makes Losses
MC
ATC
Average
total cost
Loss-
minimizing
quantity
Price
11. Monopolistic Competition in the Short Run
Short-run economic profits encourage new firms
to enter the market. This:
Increases the number of products offered.
Reduces demand faced by firms already in the
market.
Incumbent firms’ demand curves shift to the left.
Demand for the incumbent firms’ products fall,
and their profits decline.
12. Monopolistic Competition in the Short Run
Short-run economic losses encourage firms to
exit the market. This:
Decreases the number of products offered.
Increases demand faced by the remaining
firms.
Shifts the remaining firms’ demand curves to
the right.
Increases the remaining firms’ profits.
14. A Monopolistic Competitor
in the Long Run...
Quantity
Price
0
Demand
MR
ATC
MC
Profit-maximizing
quantity
P=AT
C
15. Two Characteristics of Long-Run
Equilibrium
As in a monopoly, price exceeds marginal
cost.
Profit maximization requires marginal revenue
to equal marginal cost.
The downward-sloping demand curve makes
marginal revenue less than price.
16. Two Characteristics of Long-Run
Equilibrium
As in a competitive market, price equals
average total cost.
Free entry and exit drive economic profit
to zero.
17. Monopolistic versus Perfect Competition
There are two noteworthy differences
between monopolistic and perfect
competition—excess capacity and
markup.
18. Excess Capacity
There is no excess capacity in perfect
competition in the long run.
Free entry results in competitive firms
producing at the point where average
total cost is minimized, which is the
efficient scale of the firm.
19. Excess Capacity
There is excess capacity in monopolistic
competition in the long run.
In monopolistic competition, output is
less than the efficient scale of perfect
competition.
20. Excess Capacity...
Quantity
(a) Monopolistically Competitive Firm (b) Perfectly Competitive Firm
Quantity
Price
P = MR
(deman
d curve)
MC
ATC
Price
Demand
MC
ATC
Excess capacity
Quantity
produced
Efficient
scale
P = MC
Quantity
produced
= Efficient
scale
P
21. Markup Over Marginal Cost
For a competitive firm, price
equals marginal cost.
For a monopolistically competitive
firm, price exceeds marginal cost.
22. Markup Over Marginal Cost
Because price exceeds marginal
cost, an extra unit sold at the
posted price means more profit for
the monopolistically competitive
firm.
23. Markup Over Marginal Cost...
Quantity
(a) Monopolistically Competitive Firm (b) Perfectly Competitive Firm
Quantity
Price
P = MC P = MR
(deman
d curve)
MC
ATC
Quantity
produced
Price
P
Demand
Marginal
cost
MC
ATC
MR
Markup
Quantity
produced
24. Monopolistic versus Perfect Competition...
Quantity
(a) Monopolistically Competitive Firm (b) Perfectly Competitive Firm
Quantity
Price
P = MR
(deman
d curve)
MC
ATC
Quantity
produced
Efficient
scale
Price
P
Demand
MC
ATC
P = MC
Excess capacity
Marginal
cost
Markup
MR
Quantity produced =
Efficient scale
25. Monopolistic Competition and the
Welfare of Society
Monopolistic competition does not
have all the desirable properties of
perfect competition.
26. Monopolistic Competition and the
Welfare of Society
There is the normal deadweight loss of
monopoly pricing in monopolistic
competition caused by the markup of price
over marginal cost.
However, the administrative burden of
regulating the pricing of all firms that
produce differentiated products would be
overwhelming.
27. Monopolistic Competition and the
Welfare of Society
Another way in which monopolistic
competition may be socially inefficient is that
the number of firms in the market may not be
the “ideal” one. There may be too much or
too little entry.
28. Monopolistic Competition and the
Welfare of Society
Externalities of entry include:
product-variety externalities.
business-stealing externalities.
29. Monopolistic Competition and the
Welfare of Society
The product-variety externality: Because
consumers get some consumer surplus from
the introduction of a new product, entry of a
new firm conveys a positive externality on
consumers.
30. Monopolistic Competition and the
Welfare of Society
The business-stealing externality:
Because other firms lose customers and
profits from the entry of a new competitor,
entry of a new firm imposes a negative
externality on existing firms.
31. Advertising
When firms sell differentiated products and
charge prices above marginal cost, each firm
has an incentive to advertise in order to
attract more buyers to its particular product.
32. Advertising
Firms that sell highly differentiated
consumer goods typically spend between
10 and 20 percent of revenue on
advertising.
Overall, about 2 percent of total revenue,
or over $100 billion a year, is spent on
advertising.
33. Advertising
Critics of advertising argue that firms
advertise in order to manipulate people’s
tastes.
They also argue that it impedes
competition by implying that products are
more different than they truly are.
34. Advertising
Defenders argue that advertising provides
information to consumers
They also argue that advertising increases
competition by offering a greater variety of
products and prices.
The willingness of a firm to spend
advertising dollars can be a signal to
consumers about the quality of the product
being offered.
35. Brand Names
Critics argue that brand names cause
consumers to perceive differences that do
not really exist.
36. Brand Names
Economists have argued that brand names
may be a useful way for consumers to
ensure that the goods they are buying are
of high quality.
providing information about quality.
giving firms incentive to maintain high quality.
37. Summary
A monopolistically competitive market is
characterized by three attributes: many
firms, differentiated products, and free
entry.
The equilibrium in a monopolistically
competitive market differs from perfect
competition in that each firm has excess
capacity and each firm charges a price
above marginal cost.
38. Summary
Monopolistic competition does not have
all of the desirable properties of perfect
competition.
There is a standard deadweight loss of
monopoly caused by the markup of price
over marginal cost.
The number of firms can be too large or
too small.
39. Summary
The product differentiation inherent in
monopolistic competition leads to the
use of advertising and brand names.
Critics of advertising and brand names argue
that firms use them to take advantage of
consumer irrationality and to reduce
competition.
40. Summary
Defenders argue that firms use advertising
and brand names to inform consumers and
to compete more vigorously on price and
product quality.
42. The Four Types of Market Structure
Monopoly Oligopoly Monopolistic
Competition
Perfect
Competition
• Tap
water
• Cable TV
• Tennis
balls
• Crude oil
• Novels
• Movies
• Wheat
• Milk
Number of Firms?
Type of Products?
Many
firms
One
firm Few
firms Differentiated
products
Identical
products
43. Monopolistic Competitors in the Short
Run...
(a) Firm Makes a Profit
Quantity0
Price
Demand
MR
ATC
Profit
MC
Profit-
maximizing quantity
Price
Average
total cost
44. Monopolistic Competitors in the Short
Run...
Quantity0
Price
Demand
MR
Losses
(b) Firm Makes Losses
MC
ATC
Average
total cost
Loss-
minimizing
quantity
Price
45. A Monopolistic Competitor
in the Long Run...
Quantity
Price
0
Demand
MR
ATC
MC
Profit-maximizing
quantity
P=AT
C
46. Excess Capacity...
Quantity
(a) Monopolistically Competitive Firm (b) Perfectly Competitive Firm
Quantity
Price
P = MR
(deman
d curve)
MC
ATC
Price
Demand
MC
ATC
Excess capacity
Quantity
produced
Efficient
scale
P = MC
Quantity
produced
= Efficient
scale
P
47. Markup Over Marginal Cost...
Quantity
(a) Monopolistically Competitive Firm (b) Perfectly Competitive Firm
Quantity
Price
P = MC P = MR
(deman
d curve)
MC
ATC
Quantity
produced
Price
P
Demand
Marginal
cost
MC
ATC
MR
Markup
Quantity
produced
48. Monopolistic versus Perfect Competition...
Quantity
(a) Monopolistically Competitive Firm (b) Perfectly Competitive Firm
Quantity
Price
P = MR
(deman
d curve)
MC
ATC
Quantity
produced
Efficient
scale
Price
P
Demand
MC
ATC
P = MC
Excess capacity
Marginal
cost
Markup
MR
Quantity produced =
Efficient scale