Oligopoly Flashcards
Differentiated products
Products that are similar but not perfect substitutes
Homogenous products
Goods are identical, are perfect substitutes
Oligopoly
The market structure that applies when there are few firms competing
Monopolistic competition
The market structure that applies when there are many competing firms and products are differentiated
Monopolistic? Competition?
Monopolistic-have market power, choose their own price Competition- no restrictions on entry
Monopolistic competition vs. oligopoly with heterogeneous goods
In an oligopoly with heterogenous goods, there is barrier to entry, where there is not in monopolistic competition
Ways governments control monopolistic behavior
Collisions are illegal, limiting mergers
HHI
(%controlled by A)2+(%controlled by B)2…
The higher the HHI, the more concentrated the industry
