Hi Everyone,
Welcome to my third market structure video in the series. Today I am covering monopolistic competition. This video series is intended to supplement my written posts on market structures. Video offers another medium for me to bring my content to you. Everyone has their own preference to how they like to consume content.
Quick Summary of the main points in the video
Monopolistic competition is possibly my favourite market structure. It has many real world applications and examples. It is also reasonably well covered in mainstream economics but I am hoping I can still add a little to the topic with my own analysis.
Monopolistic competition has the following characteristics:
- Many buyers
- Many sellers
- Differentiated products
- There is both price competition as competition through product differentiation
- Very minimal barriers to entry
- Firms have some control over price but are generally considered as price takers/followers
- Supernormal profits in the short-run and normal profits in the long-run
- Allocative efficient price and quantity is generally not achieved
- Profits provide incentive to improve quality as well reduce costs
- Products are often promoted through advertising; though this type of advertising is generally informative advertising.
Monopolistic competition can also facilitate cooperation between firms to help reap economies of scale that normally only large firms can enjoy but without the loss of flexibility to respond to changes in the market.
Monopolistic competition encourages entrepreneurship which can help encourage innovation as well enable a higher standard of living and better quality of life.
I hope you enjoy the video.
All of my written market structure posts can be accessed using the following links.
Introduction to market structure written post can be accessed using the following link.
Perfect competition written post can be accessed using the following link.
Monopolistic competition written post can be accessed using the following link.
Oligopoly written post can be accessed using the following link.
Monopoly written post can be accessed using the following link.
Monopsony written post can be accessed using the following link.
Oligopsony written post can be accessed using the following link.
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