Question

discuss the basic elements of chamberlins theory of monopolistic competition.. long answer dena plz... step by step​

Answer 1

Answer:

Each firm monopolises a product, although it shares the market with the rest of the industry. There are a great number of firms in the market. No entry or exit barriers to the market. Full mobility of factors

Answer 2

Answer:

• The Chamberlin´s model analyses and explains the short and long run equilibriums that occur under monopolistic competition, a market structure consisting of multiple producers acting as monopolists even though the market as a whole resembles a perfectly competitive one. The economist Edward H. Chamberlin gives name to this model, which he developed in his book “Theory of Monopolistic Competition”, 1933.

• Chamberlin made a set of assumptions that were necessary for this market to perform properly. These assumptions include:

• The existence of a set of products that the consumers perceive to be close substitutes. The crossed elasticity of these products is high but never infinite.

• Each firm monopolises a product, although it shares the market with the rest of the industry.

• There are a great number of firms in the market.

• No entry or exit barriers to the market.

• Full mobility of factors.

• There is some degree of agent myopia in the sense that they do not learn from past errors.