Imperfect competition

You have studied two extreme forms of market structure: one with infinite producers (perfect competition) and one with a single producer (monopoly). Realistically, within the spectrum of these two models, the vast majority of firms exist in an imperfectly competitive setting where at least one firm is a price setter. You will now study two other broad categories in the world of imperfect competition: one in which many firms compete (monopolistic competition - for example, the market for restaurants in a city) and another in which few firms compete (oligopoly - for example, the cell phone industry).

Monopolistic competition

Activity

Principles of Microeconomics: "Chapter 11, Section 1: Monopolistic Competition: Competition among Many"

• Read this section to learn about monopolistic competition. Take a moment to read through the stated learning outcomes for this chapter of the text, which you can find at the beginning of each section. These outcomes should be your goals as you read through the chapter. Attempt the "Try It” problem before checking your answer.

Boundless: "Economics, Chapter 12: Monopolistic Competition"

• Read this chapter to learn about monopolistic competition.

Khan Academy: "Oligopolies and Monopolistic Competition"

• Watch this video about oligopolies and monopolistic competition.

Khan Academy: "Monopolistic Competition and Economic Profit"

• Watch this video about monopolistic competition and economic profit.

Oligopoly

Activity

Principles of Microeconomics: "Chapter 11, Section 2: Oligopoly: Competition among Few"

• Read this section, skipping the "Measuring Concentration in Oligopoly" section and proceeding straight to "The Collusion Model." Take a moment to read through the stated learning outcomes for this chapter of the text, which you can find at the beginning of each section. These outcomes should be your goals as you read through the chapter. Attempt the "Try It” problems at the end of the section before checking your answers.

Khan Academy: "Oligopolies, Duopolies, Collusion, and Cartels"

• Watch this video about oligopolies, duopolies, collusion, and cartels.

MIT OpenCourseWare: Johnathan Gruber's "Oligopoly"

• Watch this lecture for an explanation of the oligopoly model.

Game theory

Activity

Khan Academy: "Game Theory of Cheating Firms"

• Watch this video about game theory of cheating firms.

Nash equilibrium

Activity

Khan Academy: "More on Nash Equilibrium"

• Watch this video about the Nash Equilibrium.

Khan Academy: "Why Parties to Cartels Cheat"

• Watch this video about why parties to cartels cheat.

Khan Academy: "Prisoners' Dilemma and Nash Equilibrium"

• Watch this video about the Prisoners' Dilemma and the Nash Equilibrium.