Monopoly versus Perfect Competition

Competition with Differentiated Products Monopolistic versus perfect competition, long run equilibrium – Monopolistic competition Quantity: not at minimum ATC – Excess capacity P > MC, markup over marginal cost – Perfect competition Quantity: at minimum ATC – Efficient scale P = MC 11

Monopoly versus Perfect Competition

Page 1 ES2550: Week 8 Monopoly Versus Perfect Competition

Monopoly versus Perfect Competition

Figure Monopolistic versus perfect competition 4 12 Price Panel (a) shows the long-run equilibrium in a monopolistically competitive market, and panel (b) shows the long- run equilibrium in a perfectly competitive market. Two differences are notable. (1) The perfectly competitive firm produces at the efficient scale, where average total cost is minimized. By contrast, the monopolistically competitive firm produces at less than the efficient scale. (2) Price equals marginal cost under perfect competition, but price is above marginal cost under monopolistic competition. Quantity 0 (a) Monopolistically Competitive Firm MC ATC Quantity produced MC (b) Perfectly Competitive Firm MR Demand Price Quantity 0 Efficient scale Markup MC ATC Quantity produced = Efficient scale P=MR (demand curve) P=MC Excess capacity

Welfare Loss from Monopoly versus Perfect Competition

A monopoly is a market structure in which there is only one producer/seller for a product. In other words, the firm on its own is the industry. Perfect competition is a market structure in which all firms sell an identical product, all firms are price takers, they cannot control the market price of their product, firms have a relatively small market share, buyers have complete information about the product being sold and the prices charged by each firm, and finally the there’s a free entry and exit of firms. In this essay, I will attempt to compare face to face this two market structures, monopoly versus perfect competition.

Monopoly versus perfect competition - BrainMass
many entries and exits zero monopolistic versus perfect competition

Finance for Managers-Monopoly versus Perfect Competition

Monopoly and Perfect Competition Compared

Monopoly and Perfect Competition Compared I

Perfect Competition versus Monopoly See the graph below for comparisons.

Monopoly versus competitive markets