Product Market Characteristics
Monopoly
Complete barriers to entry by definition
Monopoly
Deadweight Loss (loss to society beyond monopoly profits and reduced consumer surplus.)
Perfect Competition
Effiecent. Each seller at cost. No rents. Only transfer earnings.(Long Run)
Oligopoly
Elasticity varies. Greater elasticity at higher prices. Lower elasticity at lower prices.
Monopoly
Empirical evidence of Long Run profits
Monopolistic Competition
Fewer sellers than perfect competition
Oligopoly
Fewer sellers who have some controll of market share; interdependence.
Oligopoly
Fewer substitutes available = market pricing power
Oligopoly
Formidable barriers to entry/exit
Monopoly
Generally inelastiv but still elastic at higher prices
Monopoly
Hetergeneous since there are no close substitutes
Monopolistic Competition
Heterogeneous products
Monopoly
High pricing power (P-MC/P)
Perfect Competition
Homogeneous products from all sellers
Perfect Competition
Ideal social pricing P=MC (Long Run)
Monopolistic Competition
Imperfect elasticity. Depends on degree of innovation.
Monopolistic Competition
Imperfect substitutions
Monopolistic Competition
Inefficient, excess capacity since P=AC (but not at minimum)
Perfect Competition
Many sellers (They are price-takers from the market)
Oligopoly
Monopoly pricing power leads to waste/inefficiency. Some economics of scale.
Monopolistic Competition
Mostly non-price competition; some independent pricing
Oligopoly
Much interdependence in pricing. Some evidence of monopoly pricing policy
Perfect Competition
No barriers to entry/exit
Monopoly
No close substitutes
Perfect Competition
No pricing policy or strategy. Price at market price, price-takers
Perfect Competition
One product type available (fully substitutable) available from all sellers
Monopoly
One seller for whom there is no close substitutes.
Monopolisitc Competition
P=AC; tendency for Long Run zero economic profits
Perfect Competition
P=MR (Long Run)
Monopolistic Competition
P>MC
Monopoly
P>MC
Oligopoly
P>MC
Monopolistic Competition
P>MR
Monopoly
P>MR
Oligopoly
P>MR
Perfect Competition
Perfectly Elastic
Oligopoly
Some markets- homogenous for speciality items. Other markets heterogeneous products.
Oligopoly
Tendency for existence of Long Run economic profits.
Monopolistic Competition
Weak barriers to entry/exit
Perfect Competition
Zero economic profit. Price=Minimum AC (Long Run)