monopolistic competition
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Monopolistic Competition - chamberlin
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Meaning and Nature
• Monopolistic competition refers to a market situation in which there are either many producers producing goods which are close substitutes to one another or the product is differentiated.
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Definitions
• Joe S. Bain – “monopolistic competition is found in the industry where there are a large number of small sellers selling differentiated but close substitute products”.
• Meyers – “monopolistic competition is a situation where there many be many sellers, but with differentiated products so that competition is no longer on price basis.”
• Stonier and Hague – “there is competition which is keen, though not perfect, between many firms making similar products.”
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Features
• Many firms• Independent price policy• Product differentiation• Free entry and exit• Selling cost• Lack of perfect knowledge• Lack of mobility of factors• More elastic demand
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Q
Equilibrium of firm under Мmonopolistic competition
PriceCosts
Quantity
MR Demand
MC AC
Qmc
Pmc