Classify evidence, not labels
Real industries can contain features of more than one textbook model. Which description best fits monopolistic competition? Many sellers offering an identical product One seller protected by a barrier to entry A few firms whose decisions are interdependent One major buyer facing many sellers Many sellers offering differentiated products Many sellers offering differentiated products Monopolistic […]
Entry determines whether profit persists
Positive profit attracts competitors when barriers are low. Free entry is most important for explaining why long-run economic profit tends toward zero in markets protected by a single-firm franchise perfect competition and monopolistic competition oligopolies with substantial strategic barriers labor markets dominated by one major employer all markets, even when entry is legally prohibited perfect […]
