Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/157217
Authors: 
Todorova, Tamara
Year of Publication: 
2015
Citation: 
[Journal:] Theoretical and Practical Research in Economic Fields [Volume:] 6 [Issue:] 2 (12) (Winter) [Pages:] 127-143 [ISSN:] 2068–7710
Abstract: 
Excess capacity is viewed as a distinctive feature and an essential inefficiency of monopolistic competition as the large-group case of imperfect competition. Using a simple geometrical approach and studying the demand and cost curves faced by the individual firm, we find that there is little potential for excess capacity in monopolistically competitive markets, opposite to the common perception and wide coverage in the literature. We see monopolistic competition as the true type of competition in the presence of transaction costs where perfect competition is a hypothetical and ideal benchmark which cannot exist under positive transaction costs.
Subjects: 
excess capacity
monopolistic competition
oligopoly
transaction costs
JEL: 
D23
D24
D43
L13
Document Type: 
Preprint

Files in This Item:
File
Size
405.06 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.