垄断竞争-上海杉达学院.PPT

* * In the preceding two chapters, we studied the two extremes of the competition spectrum. This chapter focuses on monopolistic competition, one of the market structures in between the two extremes. Examples of each market type: Perfect competition: wheat, milk Monopoly: tap water, cable TV Oligopoly: tennis balls, cigarettes Monopolistic competition: novels, movies * * Another important dimension of product differentiation, not emphasized in the book, is location. Gasoline seems like an undifferentiated product, yet different gas stations charge different prices. How can some gas stations get away with charging 5 or even 10 cents more per gallon? The answer is product differentiation by location. Imagine you’re driving home in rush-hour traffic from a grueling 10-hour day at the office. The orange warning light comes on, indicating your car needs gas. After uttering a few choice expletives, you notice two gas stations at an upcoming intersection. The one on the right charges 5 cents more than the one on the left, but is easily accessible. The one on the left would require you to make a left-hand turn in heavy traffic to get into the station, and another to get out. And how much would you save? If you buy 20 gallons, you’d save only $1. Alternatively, imagine you run a gas station located in a highly residential area, in which there are few other businesses – including gas stations. If people want gas, they can buy it from you, or they can drive 10 minutes to a more commercial area with lots of gas stations. Your location allows you to charge a higher price. Business people have long understood that location is a critical dimension of product differentiation. Hence the saying “location, location, location.” * * That long-run profits are zero follows from free entry/exit. The market power of a monopolistic competitor follows from the fact that it sells a product that is at least somewhat different from products sold by othe