Lecture+Ⅻ.pptVIP

Lecture Ⅻ Monopolistic Competition and Oligopoly 12.1 Monopolistic Competition The makings of monopolistic competition 1.Firms compete by selling differentiated products that are highly substitutable for one another but not perfect substitutes. 2.There is free entry and exit 12.2 Oligopoly Nash Equilibrium: Each firm is doing the best it can given what its competitors are doing. The Cournot Model Cournot Model(1838) : Each firm treats the output level of its competitor as fixed when deciding how much to produce , and the two firms make their decisions at the same time. Th