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Characteristics of Monopolistic Competition?
- Many buyers & many sellers
- Diferentiated products
- Easy entry/exit of firms
- Price Seekers
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Characteristics of an Oliogopoly?
- Many buyers & few large sellers
- No easy entry ino business
- Both differentiated and homogeneous goods
- Price Seekers
- EP > 0 in long run
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Product Differentiation
Process of creating real or apparent differences between goods and services
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Non-price Competition
Advertising, packaging, product development, better quality, and better services
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Mutual Interdependence
Action by one firm may cause a reaction on the part of other firms
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Price Leadership
Occurs when a dominant firm in an industry raises or lowers its prices, and other firms follow suit
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Cartel
Formal agreement among firms to set prices and output quotas
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Imperfect Competition
A market structure between the extremes of perfect competition and monopoly
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Kinked Demand Curve
Faces an oligopolist that assumes rivals will match a price decrease, but ignores a price increase
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Can an oliogopolist earn EP in the long-run?
Yes, as long as there are only a few firms producing that product or service
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