4
votes
Accepted
Why does demand curve shift in, in a monopolistic competitive market?
Demand for existing firms' product shifts in because the entering firms attract some of the users.
- 1,105
3
votes
In which market structure does the consumer has almost zero knowledge about the good?
The market for lemons. Paper is here.
The example most commonly given is used cars. The result is market failure.
- 3,274
3
votes
The Price and Demand Index in Homothetic Kimball Utility
The problem is the following:
$$
\begin{align*}
\max_{Q, q_\omega} Q \text{ s.t. } &\int Y\left(q_\omega/Q\right) d\omega = 1,\\
&\int p_\omega q_\omega d\omega = y
\end{align*}
$$
The first ...
- 8,737
3
votes
Accepted
Log-Linearizing a Dixit-Stiglitz function
Thanks for the hint and the link! I think I now managed to find the solution.
Putting the exponent on the LHS and replacing
$C_t^{1-\gamma}$ with $C+(1-\gamma) C^{1-\gamma}C \tilde{c}$
and
$C_t(...
- 840
3
votes
Accepted
Derivation of aggregate demand function for Monopolistic Competition (based on Combes et. al, 2008)
As we have discussed in the comments, the utility function used in the book is Cobb-Douglas: $U = CM^{\mu}A^{1 - \mu}$. The well known fact mentioned in equation (3.3) on page 57 - the one that you ...
- 1,278
2
votes
Concentration Measures
Unfortunately, I'm not sure there's a clear answer to your question, since it so often depends on what the specific needs are for the specific project. Overall, there are a number of different ways to ...
- 1,370
2
votes
Have countries with a monopoly on a resource in an area ever established 1-company monopolies in that area to drive up price?
Yes, you are describing the (British) East India Company. A royal charter granted it a 15 year monopoly on English trade with "all countries east of the Cape of Good Hope and west of the Straits of ...
- 1,346
2
votes
Accepted
Constant MC - Monopolstic Competition
It is possible for firms to have constant marginal costs in monopolistic competition in theory. Nevertheless, they must also have fixed costs. The fixed costs prevent firms from entering in sufficient ...
- 5,394
1
vote
Accepted
Will there always be excess profit in the Cournot model equilibrium/monopoly
If the AC curve is assumed convex and demand is assumed linear, as in the figure, then an AC curve tangent to the demand line means that AC > P at all quantities but one (where AC = P). Thus the ...
- 4,517
1
vote
Accepted
demand curve shift in a monopolistic competitive market
But my question is, will the slope of the demand curve change as it moves leftward?
The slope does not change because one assumes that relative prices and consumer preferences do not change. This is a ...
- 520
1
vote
Accepted
What happens to consumer surplus and profits as firms get more information in Hotelling's duopoly model?
The article Quality of Information and Oligopolistic Price
Discrimination by Liu and Serfes covers this topic in great detail. It also has a rather nice literature review.
- 26k
1
vote
Market behavior when consumer must choose product before knowing price?
Yes, we can model this as a choice under uncertainty, where the distribution is over the set of prices the consumer may face. The consumer could have an expected budget with expected demands and you ...
- 756
1
vote
Will there be any competition amongst cement retailers?
Since they are different retailers, their products are not perfectly homogeneous. The differences might be in delivery times, friendliness of representatives, packaging etc. So, their products are not ...
- 36
1
vote
Is the global Automobile Industry changing from an oligopoly to monopolistic competition?
The automotive industry is being disrupted by new trends such as electric vehicles and self-driving cars. These, still, represent a minor part of the market.
So the answer would be no, for the ...
- 2,155
1
vote
Free market defense against anti-competitive behavior?
Depends on what you mean by 'possible'. The liquor stores in your example could form a union, and collectively bargain with brands. Then if a brand breaks a contract with one of them, they all break ...
- 26k
1
vote
Monopoly and competitive output levels
The monopolist will restrict output to be able to charge a higher price.
It is true that if the monopolist reduced the price, it could sell more units, but the benefit of selling more units is more ...
- 1,047
1
vote
Are market structures on a spectrum?
If there were such a spectrum, it would not be one dimensional. For instance, we could compare the competitiveness of markets with homogeneous products in terms of the number of firms in that market, ...
- 14.3k
1
vote
Would you consider airport parking to be a monopoly or a monopolistic market?
This depends on how you define the good in question, which is a typical problem when talking about market structure. If the good is "parking at the airport " then it's probably a monopoly since most ...
- 358
1
vote
Would you consider airport parking to be a monopoly or a monopolistic market?
If there are different companies offering with different prices, but not so many companies that it is perfect competition, then it is monopolistic and not a monopoly.
- 5,394
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