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12 - 1Copyright McGraw-Hill/Irwin, 2005
Monopolistic Competition
Characteristics
Price and Output in Monopolistic Competition
Monopolistic Competition and Efficiency
Oligopoly
Oligopolies and Mergers
Three Oligopoly Models
Kinked-Demand Theory
Cartels and Collusion
Price Leadership
Oligopoly and Efficiency
Key Terms
PreviousSlide
NextSlide
EndEndShowShow
Monopolistic Competition
and Oligopoly
Monopolistic Competition
and Oligopoly
SuperiorCheese12C H A P T E R
12 - 2Copyright McGraw-Hill/Irwin, 2005
Monopolistic Competition
Characteristics
Price and Output in Monopolistic Competition
Monopolistic Competition and Efficiency
Oligopoly
Oligopolies and Mergers
Three Oligopoly Models
Kinked-Demand Theory
Cartels and Collusion
Price Leadership
Oligopoly and Efficiency
Key Terms
PreviousSlide
NextSlide
EndEndShowShow
Market Structure Continuum
PureCompetition
PureMonopoly
MonopolisticCompetition Oligopoly
FOUR MARKET MODELSMonopolistic Competition:•Relatively Large Number of Sellers
•Differentiated Products•Easy Entry and Exit
12 - 3Copyright McGraw-Hill/Irwin, 2005
Monopolistic Competition
Characteristics
Price and Output in Monopolistic Competition
Monopolistic Competition and Efficiency
Oligopoly
Oligopolies and Mergers
Three Oligopoly Models
Kinked-Demand Theory
Cartels and Collusion
Price Leadership
Oligopoly and Efficiency
Key Terms
PreviousSlide
NextSlide
EndEndShowShow
CHARACTERISTICS
Relatively Large Number of Sellers•Small Market Shares•No Collusion•Independent Action
12 - 4Copyright McGraw-Hill/Irwin, 2005
Monopolistic Competition
Characteristics
Price and Output in Monopolistic Competition
Monopolistic Competition and Efficiency
Oligopoly
Oligopolies and Mergers
Three Oligopoly Models
Kinked-Demand Theory
Cartels and Collusion
Price Leadership
Oligopoly and Efficiency
Key Terms
PreviousSlide
NextSlide
EndEndShowShow
Differentiated Products• Product Attributes• Service• Location• Brand Names and
Packaging• Some Control Over
Price• Easy Entry and Exit• Advertising
CHARACTERISTICS
12 - 5Copyright McGraw-Hill/Irwin, 2005
Monopolistic Competition
Characteristics
Price and Output in Monopolistic Competition
Monopolistic Competition and Efficiency
Oligopoly
Oligopolies and Mergers
Three Oligopoly Models
Kinked-Demand Theory
Cartels and Collusion
Price Leadership
Oligopoly and Efficiency
Key Terms
PreviousSlide
NextSlide
EndEndShowShow
D
MR
P1
ATCP
rice
an
d C
ost
s
Q1
Short-RunEconomic
Profits
Expect New Competitors
PRICE AND OUTPUT INMONOPOLISTIC COMPETITION
Quantity
A1
MC
12 - 6Copyright McGraw-Hill/Irwin, 2005
Monopolistic Competition
Characteristics
Price and Output in Monopolistic Competition
Monopolistic Competition and Efficiency
Oligopoly
Oligopolies and Mergers
Three Oligopoly Models
Kinked-Demand Theory
Cartels and Collusion
Price Leadership
Oligopoly and Efficiency
Key Terms
PreviousSlide
NextSlide
EndEndShowShow
D
MR
P1
ATCP
rice
an
d C
ost
s
Q1
Expect New Competitors
PRICE AND OUTPUT INMONOPOLISTIC COMPETITION
Quantity
A1
New competition drives down theprice level – leading to economic
losses in the short run.
MC
Short-RunEconomic
Profits
12 - 7Copyright McGraw-Hill/Irwin, 2005
Monopolistic Competition
Characteristics
Price and Output in Monopolistic Competition
Monopolistic Competition and Efficiency
Oligopoly
Oligopolies and Mergers
Three Oligopoly Models
Kinked-Demand Theory
Cartels and Collusion
Price Leadership
Oligopoly and Efficiency
Key Terms
PreviousSlide
NextSlide
EndEndShowShow
D
MR
MC
P2
ATCP
rice
an
d C
ost
s
Q2
Short-RunEconomic
Losses
PRICE AND OUTPUT INMONOPOLISTIC COMPETITION
Quantity
A2
12 - 8Copyright McGraw-Hill/Irwin, 2005
Monopolistic Competition
Characteristics
Price and Output in Monopolistic Competition
Monopolistic Competition and Efficiency
Oligopoly
Oligopolies and Mergers
Three Oligopoly Models
Kinked-Demand Theory
Cartels and Collusion
Price Leadership
Oligopoly and Efficiency
Key Terms
PreviousSlide
NextSlide
EndEndShowShow
Short-RunEconomic
Losses
D
MR
MC
P2
ATCP
rice
an
d C
ost
s
Q2
PRICE AND OUTPUT INMONOPOLISTIC COMPETITION
Quantity
A2With economic losses, firms willexit the market – stability occurswhen economic profits are zero.
12 - 9Copyright McGraw-Hill/Irwin, 2005
Monopolistic Competition
Characteristics
Price and Output in Monopolistic Competition
Monopolistic Competition and Efficiency
Oligopoly
Oligopolies and Mergers
Three Oligopoly Models
Kinked-Demand Theory
Cartels and Collusion
Price Leadership
Oligopoly and Efficiency
Key Terms
PreviousSlide
NextSlide
EndEndShowShow
D
MR
MC
P3 = A3
ATCP
rice
an
d C
ost
s
Q3
PRICE AND OUTPUT INMONOPOLISTIC COMPETITION
Quantity
Long-Run EquilibriumNormalProfitOnly
12 - 10Copyright McGraw-Hill/Irwin, 2005
Monopolistic Competition
Characteristics
Price and Output in Monopolistic Competition
Monopolistic Competition and Efficiency
Oligopoly
Oligopolies and Mergers
Three Oligopoly Models
Kinked-Demand Theory
Cartels and Collusion
Price Leadership
Oligopoly and Efficiency
Key Terms
PreviousSlide
NextSlide
EndEndShowShow
MONOPOLISTIC COMPETITIONAND EFFICIENCY
• Not Productively Efficient
Minimum ATC
• Not Allocatively Efficient
Price MC
• Excess CapacityGraphically…
12 - 11Copyright McGraw-Hill/Irwin, 2005
Monopolistic Competition
Characteristics
Price and Output in Monopolistic Competition
Monopolistic Competition and Efficiency
Oligopoly
Oligopolies and Mergers
Three Oligopoly Models
Kinked-Demand Theory
Cartels and Collusion
Price Leadership
Oligopoly and Efficiency
Key Terms
PreviousSlide
NextSlide
EndEndShowShow
D
MR
MC
P3 = A3
ATCP
rice
an
d C
ost
s
Q3
Quantity
Long-Run EquilibriumPrice is Not= Minimum
ATC
Price MC
MONOPOLISTIC COMPETITIONAND EFFICIENCY
12 - 12Copyright McGraw-Hill/Irwin, 2005
Monopolistic Competition
Characteristics
Price and Output in Monopolistic Competition
Monopolistic Competition and Efficiency
Oligopoly
Oligopolies and Mergers
Three Oligopoly Models
Kinked-Demand Theory
Cartels and Collusion
Price Leadership
Oligopoly and Efficiency
Key Terms
PreviousSlide
NextSlide
EndEndShowShow
MONOPOLISTIC COMPETITIONAND EFFICIENCY
Product Variety• Benefits of Product
Variety• Nonprice Competition• Advertising Role• Trial & Error Search for
Maximum Profits
12 - 13Copyright McGraw-Hill/Irwin, 2005
Monopolistic Competition
Characteristics
Price and Output in Monopolistic Competition
Monopolistic Competition and Efficiency
Oligopoly
Oligopolies and Mergers
Three Oligopoly Models
Kinked-Demand Theory
Cartels and Collusion
Price Leadership
Oligopoly and Efficiency
Key Terms
PreviousSlide
NextSlide
EndEndShowShow Market Structure Continuum
PureCompetition
PureMonopoly
MonopolisticCompetition Oligopoly
FOUR MARKET MODELSOligopoly:•A Few Large Producers•Homogeneous or Differentiated Products
•Control Over Price, But Mutual Interdependence•Strategic Behavior
•Entry Barriers
12 - 14Copyright McGraw-Hill/Irwin, 2005
Monopolistic Competition
Characteristics
Price and Output in Monopolistic Competition
Monopolistic Competition and Efficiency
Oligopoly
Oligopolies and Mergers
Three Oligopoly Models
Kinked-Demand Theory
Cartels and Collusion
Price Leadership
Oligopoly and Efficiency
Key Terms
PreviousSlide
NextSlide
EndEndShowShow
OLIGOPOLIES AND MERGERS
MergersMeasures of Industry Concentration
•Concentration Ratio•Localized Markets•Interindustry Competition•World Trade•Import Competition
12 - 15Copyright McGraw-Hill/Irwin, 2005
Monopolistic Competition
Characteristics
Price and Output in Monopolistic Competition
Monopolistic Competition and Efficiency
Oligopoly
Oligopolies and Mergers
Three Oligopoly Models
Kinked-Demand Theory
Cartels and Collusion
Price Leadership
Oligopoly and Efficiency
Key Terms
PreviousSlide
NextSlide
EndEndShowShow
OLIGOPOLIES AND MERGERS
Herfindahl IndexSum of the squared percentage marketshares for all firms in the industry – Places greater weight upon the largerfirms(%S1)2 + (%S2)2 + (%S3)2 + … + (%Sn)2
A greater Herfindahl Index indicates a greater concentration of market power in the industry.(Pure competition is near zero.)
12 - 16Copyright McGraw-Hill/Irwin, 2005
Monopolistic Competition
Characteristics
Price and Output in Monopolistic Competition
Monopolistic Competition and Efficiency
Oligopoly
Oligopolies and Mergers
Three Oligopoly Models
Kinked-Demand Theory
Cartels and Collusion
Price Leadership
Oligopoly and Efficiency
Key Terms
PreviousSlide
NextSlide
EndEndShowShow
OLIGOPOLIES AND MERGERS
Mutual InterdependenceGame-Theory ModelCollusive Tendencies
•CollusionIncentive to CheatIntroduction to Game Theory…
12 - 17Copyright McGraw-Hill/Irwin, 2005
Monopolistic Competition
Characteristics
Price and Output in Monopolistic Competition
Monopolistic Competition and Efficiency
Oligopoly
Oligopolies and Mergers
Three Oligopoly Models
Kinked-Demand Theory
Cartels and Collusion
Price Leadership
Oligopoly and Efficiency
Key Terms
PreviousSlide
NextSlide
EndEndShowShow
OLIGOPOLY BEHAVIORA Game-Theory Overview
High
Low
High LowU
pto
wn
’s P
rice
Str
ateg
yRareAir’s Price Strategy
BA
DC
$12 $15
$12 $6
$6 $8
$8$15
12 - 18Copyright McGraw-Hill/Irwin, 2005
Monopolistic Competition
Characteristics
Price and Output in Monopolistic Competition
Monopolistic Competition and Efficiency
Oligopoly
Oligopolies and Mergers
Three Oligopoly Models
Kinked-Demand Theory
Cartels and Collusion
Price Leadership
Oligopoly and Efficiency
Key Terms
PreviousSlide
NextSlide
EndEndShowShow
OLIGOPOLY BEHAVIORA Game-Theory Overview
High
Low
High LowU
pto
wn
’s P
rice
Str
ateg
yRareAir’s Price Strategy
BA
DC
$12 $15
$12 $6
$6 $8
$8$15
GreatestCombined
Profit
12 - 19Copyright McGraw-Hill/Irwin, 2005
Monopolistic Competition
Characteristics
Price and Output in Monopolistic Competition
Monopolistic Competition and Efficiency
Oligopoly
Oligopolies and Mergers
Three Oligopoly Models
Kinked-Demand Theory
Cartels and Collusion
Price Leadership
Oligopoly and Efficiency
Key Terms
PreviousSlide
NextSlide
EndEndShowShow
OLIGOPOLY BEHAVIORA Game-Theory Overview
High
Low
High LowU
pto
wn
’s P
rice
Str
ateg
yRareAir’s Price Strategy
BA
DC
$12 $15
$12 $6
$6 $8
$8$15
IndependentActions
StimulateResponse
12 - 20Copyright McGraw-Hill/Irwin, 2005
Monopolistic Competition
Characteristics
Price and Output in Monopolistic Competition
Monopolistic Competition and Efficiency
Oligopoly
Oligopolies and Mergers
Three Oligopoly Models
Kinked-Demand Theory
Cartels and Collusion
Price Leadership
Oligopoly and Efficiency
Key Terms
PreviousSlide
NextSlide
EndEndShowShow
OLIGOPOLY BEHAVIORA Game-Theory Overview
High
Low
High LowU
pto
wn
’s P
rice
Str
ateg
yRareAir’s Price Strategy
BA
DC
$12 $15
$12 $6
$6 $8
$8$15
IndependentActions
StimulateResponse
Gravitatingto the
Worst Case
12 - 21Copyright McGraw-Hill/Irwin, 2005
Monopolistic Competition
Characteristics
Price and Output in Monopolistic Competition
Monopolistic Competition and Efficiency
Oligopoly
Oligopolies and Mergers
Three Oligopoly Models
Kinked-Demand Theory
Cartels and Collusion
Price Leadership
Oligopoly and Efficiency
Key Terms
PreviousSlide
NextSlide
EndEndShowShow
OLIGOPOLY BEHAVIORA Game-Theory Overview
High
Low
High LowU
pto
wn
’s P
rice
Str
ateg
yRareAir’s Price Strategy
BA
DC
$12 $15
$12 $6
$6 $8
$8$15
CollusionInvites aDifferentSolution
12 - 22Copyright McGraw-Hill/Irwin, 2005
Monopolistic Competition
Characteristics
Price and Output in Monopolistic Competition
Monopolistic Competition and Efficiency
Oligopoly
Oligopolies and Mergers
Three Oligopoly Models
Kinked-Demand Theory
Cartels and Collusion
Price Leadership
Oligopoly and Efficiency
Key Terms
PreviousSlide
NextSlide
EndEndShowShow
OLIGOPOLY BEHAVIORA Game-Theory Overview
High
Low
High LowU
pto
wn
’s P
rice
Str
ateg
yRareAir’s Price Strategy
BA
DC
$12 $15
$12 $6
$6 $8
$8$15
CollusionInvites aDifferentSolution
12 - 23Copyright McGraw-Hill/Irwin, 2005
Monopolistic Competition
Characteristics
Price and Output in Monopolistic Competition
Monopolistic Competition and Efficiency
Oligopoly
Oligopolies and Mergers
Three Oligopoly Models
Kinked-Demand Theory
Cartels and Collusion
Price Leadership
Oligopoly and Efficiency
Key Terms
PreviousSlide
NextSlide
EndEndShowShow
OLIGOPOLY BEHAVIORA Game-Theory Overview
High
Low
High LowU
pto
wn
’s P
rice
Str
ateg
yRareAir’s Price Strategy
BA
DC
$12 $15
$12 $6
$6 $8
$8$15
But, theincentiveto cheatis very
real
CollusionInvites aDifferentSolution
12 - 24Copyright McGraw-Hill/Irwin, 2005
Monopolistic Competition
Characteristics
Price and Output in Monopolistic Competition
Monopolistic Competition and Efficiency
Oligopoly
Oligopolies and Mergers
Three Oligopoly Models
Kinked-Demand Theory
Cartels and Collusion
Price Leadership
Oligopoly and Efficiency
Key Terms
PreviousSlide
NextSlide
EndEndShowShow
No Standard Model due to...Diversity of OligopoliesComplications of Interdependence
1 – Kinked Demand Curve2 – Cartels and Collusion3 – Price Leadership
THREE OLIGOPOLY MODELS
Alternative Models:
12 - 25Copyright McGraw-Hill/Irwin, 2005
Monopolistic Competition
Characteristics
Price and Output in Monopolistic Competition
Monopolistic Competition and Efficiency
Oligopoly
Oligopolies and Mergers
Three Oligopoly Models
Kinked-Demand Theory
Cartels and Collusion
Price Leadership
Oligopoly and Efficiency
Key Terms
PreviousSlide
NextSlide
EndEndShowShow
D1
MR1Quantity
The firm’s demand andmarginal revenue curves
KINKED DEMAND THEORY:NONCOLLUSIVE OLIGOPOLY
Pri
ce
12 - 26Copyright McGraw-Hill/Irwin, 2005
Monopolistic Competition
Characteristics
Price and Output in Monopolistic Competition
Monopolistic Competition and Efficiency
Oligopoly
Oligopolies and Mergers
Three Oligopoly Models
Kinked-Demand Theory
Cartels and Collusion
Price Leadership
Oligopoly and Efficiency
Key Terms
PreviousSlide
NextSlide
EndEndShowShow
MR2D1
D2
MR1Quantity
The rival’s demand andmarginal revenue curves
KINKED DEMAND THEORY:NONCOLLUSIVE OLIGOPOLY
Pri
ce
12 - 27Copyright McGraw-Hill/Irwin, 2005
Monopolistic Competition
Characteristics
Price and Output in Monopolistic Competition
Monopolistic Competition and Efficiency
Oligopoly
Oligopolies and Mergers
Three Oligopoly Models
Kinked-Demand Theory
Cartels and Collusion
Price Leadership
Oligopoly and Efficiency
Key Terms
PreviousSlide
NextSlide
EndEndShowShow
MR2D1
D2
MR1Quantity
KINKED DEMAND THEORY:NONCOLLUSIVE OLIGOPOLY
Pri
ce
Rivals tend tofollow a price cut
12 - 28Copyright McGraw-Hill/Irwin, 2005
Monopolistic Competition
Characteristics
Price and Output in Monopolistic Competition
Monopolistic Competition and Efficiency
Oligopoly
Oligopolies and Mergers
Three Oligopoly Models
Kinked-Demand Theory
Cartels and Collusion
Price Leadership
Oligopoly and Efficiency
Key Terms
PreviousSlide
NextSlide
EndEndShowShow
MR2D1
D2
MR1Quantity
KINKED DEMAND THEORY:NONCOLLUSIVE OLIGOPOLY
Pri
ce
Rivals tend tofollow a price cut
or ignore aprice increase
12 - 29Copyright McGraw-Hill/Irwin, 2005
Monopolistic Competition
Characteristics
Price and Output in Monopolistic Competition
Monopolistic Competition and Efficiency
Oligopoly
Oligopolies and Mergers
Three Oligopoly Models
Kinked-Demand Theory
Cartels and Collusion
Price Leadership
Oligopoly and Efficiency
Key Terms
PreviousSlide
NextSlide
EndEndShowShow
MR2D1
D2
MR1Quantity
Effectively creatinga kinked demand curve
KINKED DEMAND THEORY:NONCOLLUSIVE OLIGOPOLY
Pri
ce
12 - 30Copyright McGraw-Hill/Irwin, 2005
Monopolistic Competition
Characteristics
Price and Output in Monopolistic Competition
Monopolistic Competition and Efficiency
Oligopoly
Oligopolies and Mergers
Three Oligopoly Models
Kinked-Demand Theory
Cartels and Collusion
Price Leadership
Oligopoly and Efficiency
Key Terms
PreviousSlide
NextSlide
EndEndShowShow
D
Quantity
Effectively creatinga kinked demand curve
KINKED DEMAND THEORY:NONCOLLUSIVE OLIGOPOLY
Pri
ce
12 - 31Copyright McGraw-Hill/Irwin, 2005
Monopolistic Competition
Characteristics
Price and Output in Monopolistic Competition
Monopolistic Competition and Efficiency
Oligopoly
Oligopolies and Mergers
Three Oligopoly Models
Kinked-Demand Theory
Cartels and Collusion
Price Leadership
Oligopoly and Efficiency
Key Terms
PreviousSlide
NextSlide
EndEndShowShow
D
MR1Quantity
Effectively creatinga kinked demand curve
KINKED DEMAND THEORY:NONCOLLUSIVE OLIGOPOLY
Pri
ce
MC2
MC1
MR2
12 - 32Copyright McGraw-Hill/Irwin, 2005
Monopolistic Competition
Characteristics
Price and Output in Monopolistic Competition
Monopolistic Competition and Efficiency
Oligopoly
Oligopolies and Mergers
Three Oligopoly Models
Kinked-Demand Theory
Cartels and Collusion
Price Leadership
Oligopoly and Efficiency
Key Terms
PreviousSlide
NextSlide
EndEndShowShow
D
Quantity
Profit maximizationMR = MC occurs
at the kink
KINKED DEMAND THEORY:NONCOLLUSIVE OLIGOPOLY
Pri
ce
MC2
MC1
MR2
MR1
12 - 33Copyright McGraw-Hill/Irwin, 2005
Monopolistic Competition
Characteristics
Price and Output in Monopolistic Competition
Monopolistic Competition and Efficiency
Oligopoly
Oligopolies and Mergers
Three Oligopoly Models
Kinked-Demand Theory
Cartels and Collusion
Price Leadership
Oligopoly and Efficiency
Key Terms
PreviousSlide
NextSlide
EndEndShowShow
D
Quantity
This behavior can setoff a price war.
KINKED DEMAND THEORY:NONCOLLUSIVE OLIGOPOLY
Pri
ce
MC2
MC1
MR2
MR1
12 - 34Copyright McGraw-Hill/Irwin, 2005
Monopolistic Competition
Characteristics
Price and Output in Monopolistic Competition
Monopolistic Competition and Efficiency
Oligopoly
Oligopolies and Mergers
Three Oligopoly Models
Kinked-Demand Theory
Cartels and Collusion
Price Leadership
Oligopoly and Efficiency
Key Terms
PreviousSlide
NextSlide
EndEndShowShow
If a few firms face identical or highly similar demand and costs...
Oligopoly is conducive to collusion.
they will tend to seek jointprofit maximization.
CARTELS AND OTHER COLLUSION
Graphically…
12 - 35Copyright McGraw-Hill/Irwin, 2005
Monopolistic Competition
Characteristics
Price and Output in Monopolistic Competition
Monopolistic Competition and Efficiency
Oligopoly
Oligopolies and Mergers
Three Oligopoly Models
Kinked-Demand Theory
Cartels and Collusion
Price Leadership
Oligopoly and Efficiency
Key Terms
PreviousSlide
NextSlide
EndEndShowShow
Colluding Oligopolists WillSplit the Monopoly Profits
D
MC
ATC
MR
EconomicProfit
MR = MC
Pri
ce a
nd
co
sts
Q0
P0
A0
CARTELS AND OTHER COLLUSION
12 - 36Copyright McGraw-Hill/Irwin, 2005
Monopolistic Competition
Characteristics
Price and Output in Monopolistic Competition
Monopolistic Competition and Efficiency
Oligopoly
Oligopolies and Mergers
Three Oligopoly Models
Kinked-Demand Theory
Cartels and Collusion
Price Leadership
Oligopoly and Efficiency
Key Terms
PreviousSlide
NextSlide
EndEndShowShow
Overt Collusion•Cartels Defined•The OPEC Cartel
Covert Collusion•Recent Examples•U.S. Illegality•Tacit Understandings
CARTELS AND OTHER COLLUSION
12 - 37Copyright McGraw-Hill/Irwin, 2005
Monopolistic Competition
Characteristics
Price and Output in Monopolistic Competition
Monopolistic Competition and Efficiency
Oligopoly
Oligopolies and Mergers
Three Oligopoly Models
Kinked-Demand Theory
Cartels and Collusion
Price Leadership
Oligopoly and Efficiency
Key Terms
PreviousSlide
NextSlide
EndEndShowShow
Obstacles to Collusion•Demand and Cost Differences
•Number of Firms•Cheating•Recession•Potential Entry•Antitrust Law
CARTELS AND OTHER COLLUSION
12 - 38Copyright McGraw-Hill/Irwin, 2005
Monopolistic Competition
Characteristics
Price and Output in Monopolistic Competition
Monopolistic Competition and Efficiency
Oligopoly
Oligopolies and Mergers
Three Oligopoly Models
Kinked-Demand Theory
Cartels and Collusion
Price Leadership
Oligopoly and Efficiency
Key Terms
PreviousSlide
NextSlide
EndEndShowShow
PRICE LEADERSHIP MODEL
Leadership Tactics•Infrequent Price Changes
•Communications•Limit Pricing
Breakdowns in Price Leadership-Price Wars
12 - 39Copyright McGraw-Hill/Irwin, 2005
Monopolistic Competition
Characteristics
Price and Output in Monopolistic Competition
Monopolistic Competition and Efficiency
Oligopoly
Oligopolies and Mergers
Three Oligopoly Models
Kinked-Demand Theory
Cartels and Collusion
Price Leadership
Oligopoly and Efficiency
Key Terms
PreviousSlide
NextSlide
EndEndShowShow
OLIGOPOLY AND ADVERTISING
Less Easily DuplicatedAdequate ResourcesPositive Effects of
AdvertisingPotential Negative
Effects of AdvertisingBrand Development
12 - 40Copyright McGraw-Hill/Irwin, 2005
Monopolistic Competition
Characteristics
Price and Output in Monopolistic Competition
Monopolistic Competition and Efficiency
Oligopoly
Oligopolies and Mergers
Three Oligopoly Models
Kinked-Demand Theory
Cartels and Collusion
Price Leadership
Oligopoly and Efficiency
Key Terms
PreviousSlide
NextSlide
EndEndShowShow
OLIGOPOLY AND EFFICIENCY
Productive EfficiencyP = Minimum ATC
Allocative EfficiencyP = MC
Oligopoly: No Productive Efficiency
Oligopoly: No Allocative Efficiency
Qualifications
monopolistic competitionproduct differentiationnonprice competitionexcess capacityoligopolyhomogeneous oligopolydifferentiated oligopolystrategic behaviormutual interdependenceconcentration ratio
interindustry competition
import competitionHerfindahl indexgame-theory modelcollusionkinked-demand
curveprice warcarteltacit understandingsprice leadership
ENDBACKCopyright McGraw-Hill/Irwin, 2005
12 - 42Copyright McGraw-Hill/Irwin, 2005
Monopolistic Competition
Characteristics
Price and Output in Monopolistic Competition
Monopolistic Competition and Efficiency
Oligopoly
Oligopolies and Mergers
Three Oligopoly Models
Kinked-Demand Theory
Cartels and Collusion
Price Leadership
Oligopoly and Efficiency
Key Terms
PreviousSlide
NextSlide
EndEndShowShow
Next...
Chapter 13
Technology, R&D, and Efficiency