Theory of Imperfect Competition and Industry Structure

Suren Basov

Chapter 7 in Microeconomics with Spreadsheets, 2017, pp 85-100 from World Scientific Publishing Co. Pte. Ltd.

Abstract: In this chapter, I will introduce theory of industry structure. So far we considered a model where firms were competitive and number of the competitors was fixed. We developed equilibrium concept to describe such a situation: Walrasian equilibrium. I will start this chapter by describing the situation, where firm are competitive, but their number is not fixed, since there is a possibility of entry. We will see that one has to develop a new equilibrium notion: a long-run equilibrium with entry, where to the condition of equality of demand and supply that determines equilibrium prices the = zero profit condition, that determines the equilibrium number of firms is added. Then I am going to relax the assumption that firms are competitive, which will lead us to the theory of imperfect competition.

Keywords: Microeconomics; Game Theory; Producer Theory; Consumer Theory; Economics of Information; Basics of Industrial Organization; Excel; The Solver (search for similar items in EconPapers)
JEL-codes: C81 (search for similar items in EconPapers)
Date: 2017
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