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Market Structure & Competition Models

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Abstractions that formalize markets and competitive interaction — general-equilibrium models such as the abstract economy and the Arrow–Debreu exchange market — and models of imperfect competition like monopolistic competition, differentiated Bertrand competition, Chamberlinian monopolistic competition, and consumer networks.

7 abstractions in this family — domain-specific abstractions that sit near one another in structural-signature space (k-means over structural-signature embeddings). Each is shown with its short description.

  • Abstract economy — In theoretical economics, an abstract economy (also called a generalized N-person game) is a model that generalizes both the standard model of an exchange economy in microeconomics, and the standard model of a game in game theory.
  • Arrow–Debreu exchange market — In theoretical economics, an Arrow–Debreu exchange market is a special case of the Arrow–Debreu model in which there is no production - there is only an exchange of already-existing goods.
  • Chamberlinian monopolistic competition — One example where Chamberlinian monopolistic competition can be experienced is the book market.
  • Consumer network — Exploiting consumer networks for marketing purposes, through techniques such as viral marketing, word-of-mouth marketing, or network marketing, is increasingly experimented with by marketers, to the extent that "some developments in customer networking are ahead of empirical research, and a few seem ahead even of accepted theory".
  • Differentiated Bertrand competition — Differentiated Bertrand competition is a price-setting model in which firms sell imperfect substitutes, so each firm's demand depends on its own price and those of its rivals.
  • Market form — Based on the factors that decide the structure of the market, the main forms of market structure are as follows.
  • Monopolistic Competition — A market structure where many small firms each sell a differentiated product — giving each a downward-sloping demand curve and local pricing power — while free entry erodes any profit until price equals average cost, leaving excess capacity as the standing signature.