monopolistic

(adjective)

Acting in the manner of a monopoly.

Related Terms

Examples of monopolistic in the following topics:

  • Defining Monopolistic Competition

    • Unlike in perfect competition, firms that are monopolistically competitive maintain spare capacity.
    • Models of monopolistic competition are often used to model industries.
    • Monopolistic competition is different from a monopoly.
    • Markets that have monopolistic competition are inefficient for two reasons.
    • In a monopolistic competitive market, the demand curve is downward sloping.

  • Efficiency of Monopolistic Competition

    • Monopolistic competitive markets are never efficient in any economic sense of the term.
    • In terms of economic efficiency, firms that are in monopolistically competitive markets behave similarly as monopolistic firms.
    • Again, since a good's price in a monopolistic competitive market always exceeds its marginal cost, the market can never be allocatively efficient.
    • Monopolistic competition creates deadweight loss and inefficiency, as represented by the yellow triangle.
    • In the short run, the monopolistic competition market acts like a monopoly.

  • Long Run Outcome of Monopolistic Competition

    • In the long run, firms in monopolistic competitive markets are highly inefficient and can only break even.
    • In the long-run, a monopolistically competitive market is inefficient.
    • Like monopolies, the suppliers in monopolistic competitive markets are price makers and will behave similarly in the long-run.
    • First, that the firms in a monopolistic competitive market will produce a surplus in the long run.
    • Explain the concept of the long run and how it applies to a firms in monopolistic competition

  • Demand Curve

    • The demand curve in a monopolistic competitive market slopes downward, which has several important implications for firms in this market.
    • The demand curve of a monopolistic competitive market slopes downward.
    • By differentiating its products, firms in a monopolistically competitive market ensure that its products are imperfect substitutes for each other.
    • Monopolistically competitive firms maximize their profit when they produce at a level where its marginal costs equals its marginal revenues.
    • Explain how the shape of the demand curve affects the firms that exist in a market with monopolistic competition

  • Short Run Outcome of Monopolistic Competition

    • Monopolistic competitive markets can lead to significant profits in the short-run, but are inefficient.
    • In the short run, a monopolistically competitive market is inefficient.
    • Like monopolies, the suppliers in monopolistic competitive markets are price makers and will behave similarly in the short-run.
    • Since monopolistically competitive firms have market power, they will produce less and charge more than a firm would under perfect competition.
    • Examine the concept of the short run and how it applies to firms in a monopolistic competition

  • Imperfect Competition and Monopolistic Competition

    • Chamberlin [1899-1967] and Joan Robinson [1903-1983] independently published similar theories on "monopolistic" and "imperfect" competition.
    • In this usage monopolistically competitive and oligopolistic markets are considered imperfect.
    • This suggests that the demand faced by a firm in a monopolistically competitive market is likely more elastic than in a monopoly.
    • In the long run, above normal profits will attract the entry of firms into monopolistic competition.
    • The results of long run equilibrium in a monopolistically competitive market are shown in Figure VIII.5.

  • Monopolistic Competition Compared to Perfect Competition

    • The key difference between perfectly competitive markets and monopolistically competitive ones is efficiency.
    • Perfect competition and monopolistic competition are two types of economic markets.
    • One of the key similarities that perfectly competitive and monopolistically competitive markets share is elasticity of demand in the long-run.
    • But in monopolistically competitive markets the products are highly differentiated.
    • In a monopolistic competitive market there are few barriers to entry and exit, but still more than in a perfectly competitive market.

  • Monopoly Production Decision

    • Like non-monopolies, monopolists will produce the at the quantity such that marginal revenue (MR) equals marginal cost (MC).
    • However, monopolists have the ability to change the market price based on the amount they produce since they are the only source of products in the market.
    • When a monopolist produces the quantity determined by the intersection of MR and MC, it can charge the price determined by the market demand curve at the quantity.
    • Therefore, monopolists produce less but charge more than a firm in a competitive market .

  • Advertising and Brand Management in Monopolistic Competition

    • Advertising and branding help firms in monopolistic competitive markets differentiate their products from those of their competitors.
    • One of the characteristics of a monopolistic competitive market is that each firm must differentiate its products.
    • Reputation among consumers is important to a monopolistically competitive firm because it is arguably the best way to differentiate itself from its competitors.

  • Productive Efficiency

    • Monopolistic companies may not be productively efficient because companies operating in a monopoly have less of an incentive to maximize output due to lack of competition.
    • However, due to economies of scale, it may be possible for the profit-maximizing level of output of monopolistic companies to occur with a lower price to the consumer than perfectly competitive companies.
    • So, consumers may pay less with a monopoly, but a monopolistic market would not achieve productive efficiency.