chapter  II
39 Pages

Monopolistic Competition

Partial monopoly, where only one entrepreneur tries to obtain the greatest possible advantage both in the fixing of price and of quantity, whilst the others do not employ a price policy but have to suit their sales to the price, is comparatively simple. The case of "monopolistic competition," i.e., the instance in which several entrepreneurs have at the same time so great a share in the production that they may be, and are, interested in influencing the price even at the cost of some reduction of their own sales, is more complex. Local differences and differences of quality create a number of limited monopolies each in their special sphere and bounded by competition from more remote markets or from substitutes. The chapter illustrates a number of different assumptions which may be supposed to hold good in markets with a few enterprises not united by agreements or in other ways bound to pay any regard to one another.