Consider the following statement from the talk: There are exactly two kinds of businesses in this...

 

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Consider the following statement from the talk: "There are exactly two kinds of businesses in this world. There are businesses that are perfectly competitive and there are businesses that are monopolies, and there is shockingly little that is in between. This dichotomy is not understood very well because people are constantly lying about the nature of businesses they are in." Explain the reasoning behind this statement. Why do monopolies pretend to be competitive? Discuss historical examples of the consequences that a firm might face when they are found to possess excessive market power. Why do competitive firms claim to possess market power? Do not quote from the talk, but provide an explanation framed in economic terms instead. What incentives do these firms face? How are their stories shaped by the degree of competition in their markets, characteristics of the demand for their product, etc. Consider the following statement from the talk: "There are exactly two kinds of businesses in this world. There are businesses that are perfectly competitive and there are businesses that are monopolies, and there is shockingly little that is in between. This dichotomy is not understood very well because people are constantly lying about the nature of businesses they are in." Explain the reasoning behind this statement. Why do monopolies pretend to be competitive? Discuss historical examples of the consequences that a firm might face when they are found to possess excessive market power. Why do competitive firms claim to possess market power? Do not quote from the talk, but provide an explanation framed in economic terms instead. What incentives do these firms face? How are their stories shaped by the degree of competition in their markets, characteristics of the demand for their product, etc.

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The Dichotomy of Perfect Competition and Monopolies Is it Realistic The statement suggests a clear division between perfect competition and monopoliesignoring nuances in realworld marketsWhile there i... View the full answer