Econ 201, Week 12
Econ 201, Week 12 ECN 201 (Professor Colleen Scott)
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ECN 201 (Professor Colleen Scott)
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This 2 page Class Notes was uploaded by Thanh Notetaker on Friday May 6, 2016. The Class Notes belongs to ECN 201 (Professor Colleen Scott) at La Salle University taught by Colleen Scott in Spring 2016. Since its upload, it has received 11 views. For similar materials see Introductory Microeconomics in Economcs at La Salle University.
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Date Created: 05/06/16
ECON201. Week Twelve (May 5 note)h Monopolistically Competitive Industries •Industry concentration •Measured by Herfindahl index •Sum of squared market shares HI =(%S1)2 +(%S2)2 +(%S3)2 + …. +(%Sn)2 Economists identify four market types: 1. Perfect competition 2.Monopolistic competition 3. Oligopoly4. Monopoly Monopolistic competitionis a marketstructure with Many firms Eachfirm produces similarbut slightlydifferent products—called product differentiation Eachfirm possesses anelementof market power No restrictions on entry of new firms to the industry Demand is highlyelastic •Short run profit or loss •Produce where MR = MC •Long run only a normal profit •Entry and exit The firm constantly manages price,product, and advertising •Better product differentiation •Better advertising •The consumer benefits by greater array of choices and better products •Types and styles •Brands and quality Oligopoly is a marketstructure inwhich A small number of firms compete. The firms might produce almostidentical products or differentiated products. Barriers to entry limit entry into the market •A cartel is a group of firms or nations that collude •Formally agreeing to the price •Sets output levels for members •Collusionis illegal inthe United States •OPEC Internet Oligopolies •The Internet became accessibletotheaverage person in the mid 1990’s •Today it is dominated by a few very largefirms •Google, Facebook, Amazon, Microsoft, Apple •Not satisfiedwithjustrevenues generated in their respectivesectors •Compete for advertising $s •Compete with their own electronic devices
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