Monopolistic Competition

1. Monopolistic Competition

2. Market Structure Number of Firm Product Differentiation Many Few Identical Product Perfect Competition Homogeneous Product Oligopoly Differentiated Product Oligopoly Differentiation Product Monopolistic Competition

3. Number of Firm Product Differentiation One Dominant One Identical Product Dominant Firm Monopoly Differentiation Product No Applicable Theory Market Structure

4. Monopoly Profit Maximization Condition MR = MC Ability to set price Price setter Market Power P > MC Entry Condition No Entry Number of firm 1 Economic Profit in long run >= 0 Firm Strategy depend on rival? NO Product Single Product

5. Competitive Profit Maximization Condition P = MR = MC Ability to set price Price taker Market Power P = MC Entry Condition Free Entry Number of firm Many Economic Profit in long run 0 Firm Strategy depend on rival? NO Product Undifferentiated

6. Monopolistic Profit Maximization Condition MR = MC Ability to set price Price setter Market Power P > MC Entry Condition Free Entry Number of firm Few or Many Economic Profit in long run 0 Firm Strategy depend on rival? YES Product May be differentiated

7. Oligopoly Profit Maximization Condition MR = MC Ability to set price Price setter Market Power P > MC Entry Condition Limited Entry Number of firm Few Economic Profit in long run >= 0 Firm Strategy depend on rival? YES Product May be differentiated

8. Monopolistic Competition Firms Compete by selling differentiated products that are highly substitutable for one another but not perfect substitution. There is free entry and exit : it is relatively easy for new firm to entry the market with their own brands and for existing firms to leave if their products become unprofitable.

9. P A P B P1 D1 D2 D Q 0 Q Q1 Q1* เส้นอุปสงค์ในความนึกคิด และเส้นอุปสงค์ที่เป็นจริง Proportional demand

10. P MC AC PSR C DSR MRSR Q QSR Equilibrium in short run

11. Equilibrium in long run P MC AC PSR DSR MRSR Q QSR