Features of monopolistic competition ppt. perfect competition, monopoly, monopolistic and oligopoly 2019-01-05

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7 Main Features of Monopolistic Competition

features of monopolistic competition ppt

So their prices cannot be very much different from each other. As with the case of petrol, diesel and kerosene. A monopolist which sells a product with no close substitute enjoy great market power and makes economic pro ts in the long run. Promoting sales of their products through advertisement is an important example of non-price competition. It ensures that there are neither abnormal profits nor any abnormal losses to a firm in the long run.

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Features of monopolistic competition ppt

features of monopolistic competition ppt

Under oligopolies, there also exist some barriers to entry of other enterprises into the business. The demand Curve is highly elastic Under monopolistic competition, the demand curve is highly elastic because firms are free to enter and exit the industry. Lack of Perfect Knowledge: Buyers and sellers do not have perfect knowledge about the market conditions. An oligopoly and a monopoly are economic market structures that are characterized by the existence of imperfect competition. The advertisement and other selling outlays by a firm change the demand for its product as well as its costs. It may also mean more prompt or courteous service, and a different way of doing business.

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Difference Between Perfect Competition and Monopolistic Competition (with Comparison Chart)

features of monopolistic competition ppt

Buyers are attracted by the sellers on the basis of specialized qualities of their products. If it fixes a higher price, it will be able to sell a relatively smaller quantity of output. Unlike perfect competition these large number of firms do not produce identical products. Definition of Monopolistic Competition Monopolistic Competition refers to a type of market structure, where the number of sellers selling similar but not exactly identical products, is large. All these facilities attract customers.


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6 monopolistic competition

features of monopolistic competition ppt

In monopolistic competition, each rm sells a di erentiated product with its market niche. Because there are a large number of firms under monopolistic competition, there exists stiff competition between them. This makes the competition among firms real and tough. It must be noted that there are no selling costs in perfect competition as there is perfect knowledge among buyers and sellers. The principal difference between these two is that in the case of perfect competition the firms are price takers, whereas in monopolistic competition the firms are price makers.

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7 Main Features of Monopolistic Competition

features of monopolistic competition ppt

There are innumerable products each being a close substitute of the other. Pricing becomes the main tool in competition among the oligopolists. Therefore the oligopolists have more market power. This means as it lowers the price of its product variety; quantity demanded of it will increase. Every firm offer products to customers at its own price.

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Monopolistic_Competition2003 (1) ppt

features of monopolistic competition ppt

With the high monopoly price, however, each individual rm in the cartel has an incentive to cheat, making even more pro t by increasing production. Although each firm producing differentiated product has the monopoly of its own product, yet he has to face the competition. Every consumer and seller can influence demand and supply in the market. Firms voluntarily choose not to enter the market. As a result, a particular product although highly priced is preferred by the consumers even if other less priced products are of same quality. We assumed that each firm do the pricing for profit maximization i.

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Monopolistic Competition

features of monopolistic competition ppt

High Transportation Cost: In this high transportation cost play an important role in order to create discrimination among commodities. For example, Pepsodent is costlier than Babool. . Here you can publish your research papers, essays, letters, stories, poetries, biographies, notes, reviews, advises and allied information with a single vision to liberate knowledge. Thus under monopolistic competition, a firm has to choose a price-output combination which will maximise its profits. This product differentiation may be real or imaginary. Let us now discuss some of the important features of this kind of market.


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What is Monopolistic Competition? definition, meaning and features

features of monopolistic competition ppt

Conversely, with the increase in the price of the product, it will lose its customers to others. The problem of product variation under monopolistic competition exists because there is differentiation of products of various firms. Even though there are only 4 firms in the industry, there are low barriers to entry and the products can easily be replaced no branding or quality constraints. The term market can be described as any place where buyers and sellers meet, directly or through dealers, to conclude transactions. Selling costs create artificial superiority in the minds of the consumers and it becomes very difficult for a consumer to evaluate different products available in the market.

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perfect competition, monopoly, monopolistic and oligopoly

features of monopolistic competition ppt

On the other hand, some of the product differentiation and non-price competition are also found in this market. Therefore, the sellers have to accept the price ascertained by the demand and supply forces of the market and sell the product, as much as they can at the price prevailing in the market. Consequently if an oligopolist behaves like a monopolist, the dead-weight loss is larger than that of a monopolistic competitive rm. Price rigidity Sandeep be Kapoor 7. As there are a large number of firms under monopolistic competition, there exists stiff competition between them. So, monopolistic competition is a market structure, where there is competition among a large number of monopolists. A firm, under perfect competition, does not confront this problem, for the product is homogeneous under perfect competition.

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