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Monopolistic competition is a type of imperfect competition such that there are many producers competing against each other but selling products that are differentiated from one another (e.g., branding, quality) and hence not perfect substitutes. In monopolistic competition, a company takes the prices charged by its rivals as given and ignores ...
In conclusion, a monopoly price is established by a monopolistic firm while they have no rivals in the market and feasible to raise price further above their marginal cost. In order to ensure a maximum economic return, the monopoly price is established at the point where marginal revenue equals marginal cost based on the firm's evaluation of ...
The main characteristics of monopolistic competition include: Differentiated products; Many sellers and buyers; Free entry and exit; Firms within this market structure are not price takers and compete based on product price, quality and through marketing efforts, setting individual prices for the unique differentiated products. [18]
The results of the study showed that the segment of lending to small and medium-sized businesses by structure is a monopolistic competition, the dominant position in which is occupied by state-owned banks. The monopoly power of this group is due to their use of economies of scale, the low cost of funding, and the lower risks of loans issued ...
Monopolistic Competition: There are a large number of enterprises, there are no restrictions on entering and exiting the market, and they sell different products of the same kind, and enterprises have a certain ability to control prices. [ 14 ]
In other words, not all of a firm's customers would leave for other products if the firm raised its prices. 2. This model dismisses the issue of interdependence when a firm sets its price. The firm will act as if it were a monopoly regarding the price it sets, not considering the potential responses from its competitors. The justification is ...
Monopolistic competition exists in-between monopoly and perfect competition, as it combines elements of both market structures. Within monopolistic competition market structures all firms have the same, relatively low degree of market power; they are all price makers, rather than price takers.
Without barriers to entry and collusion in a market, the existence of a monopoly and monopoly profit cannot persist in the long run. [1] [3] Normally, when economic profit exists within an industry, economic agents form new firms in the industry to obtain at least a portion of the existing economic profit.