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Marium Shahid
MBA-P
INDUSTRIAL ORGANIZATION
COMPETITION
CHAMBERLINIAN
COMPETITION
Definition
Chamberlinian economics begins with a focus on the unique assets and
capabilities of individual firms.
For Chamberlinain and his contemporaries ,competition in industries always goes
forward between firms with different, though perhaps overlapping.
InChamberlinianmonopolisticcompetitioneach firm has some monopoly power,
but entry drives monopoly profits to zero. Theconcept gets its name from
EdwardChamberlin. One example where
Chamberlinianmonopolisticcompetitioncan be experienced is the book market.
Competition within an industry has many of the characteristics of perfect
competition, as it has been described in neoclassical microeconomics.
MAIN CONCLUSIONS
Chamberlins monopolistic competition model analyses a whole
new market structure, apart from the classic monopoly and perfect
competition. It demonstrates that in a market the number of firms
can be irrelevant, and perfectly competitive results can be reached.
In fact, in terms ofwelfare andProduct differencation ,
monopolistic competition is desirable.
Its worth mentioning that these results are similar to those of
William Baumolscontestable markets , since the number of firms
in the market does not necessarily determine how competitive it is.
Also, the results are contrary to the results found inBertrands
duopoly model.
SCHUMPETERIAN
COMPETITION
INTRODUCTION
Schumpeter assumes a perfectly competitive economy which is in