Measuring Monopoly Power in an Industry

by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy

What are Some Other Approaches to Measuring Monopoly Power in an Industry? Both the four-firm concentration ratio and the Herfindahl-Hirschman index share some weaknesses. First, they begin from the assumption that the “market” under discussion is well-defined, and...

Restrictive Practices under Antitrust Law

by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy

What are Restrictive Practices under Antitrust Law? Antitrust law includes rules against restrictive practices – practices that do not involve outright agreements to raise price or to reduce the quantity produced, but that might have the effect of reducing...

Cost-Plus Regulation (Antitrust) – Explained

by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy

What is Cost-Plus Regulation? Cost-plus regulation is where regulators calculate the average cost of production, added in an amount for the normal rate of profit the firm should expect to earn, and set the price for consumers accordingly. This method was known as...

Perceived Demand – Monopolistic Competitor

by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy

What is Perceived Demand for a Monopolistic Competitor? A monopolistically competitive firm perceives a demand for its goods that is an intermediate case between monopoly and competition. The demand curve that a perfectly competitive firm faces is perfectly elastic or...

Monopolistic Competitors – Price and Quantity

by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy

How do Monopolistic Competitors Choose Price and Quantity? The monopolistically competitive firm decides on its profit-maximizing quantity and price in much the same way as a monopolist. A monopolistic competitor, like a monopolist, faces a downward-sloping demand...

Monopolistic Competitors – Market Entry

by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy

How do Monopolistic Competitors Affect Market Entry? If one monopolistic competitor earns positive economic profits, other firms will be tempted to enter the market. The entry of other firms into the same general market  shifts the demand curve that a monopolistically...