Do firms under monopoly have a high transportation cost? If no, then what are the two similarities between monolpoly and monolpolistic competition?
The simialrity between moopoly and monopolistic competition is that both are price maker and face a downeard sloping demand curve.
In monopolistic market, the firms are distinguished on the basis of their brand names, therefore each monopolistic firm enjoys a monopolist (or monopoly) position. This is because no other firm can produce and sell its products under the same brand name. Hence, a monopolistic firm enjoys a certain degree of monopoly due to the existence of the brand name.
Simialrly, the AR curve (or demand curve) and the MR curve faced by a monopolistic firm and monopoly firm are downward sloping.
In monopolistic market, the firms are distinguished on the basis of their brand names, therefore each monopolistic firm enjoys a monopolist (or monopoly) position. This is because no other firm can produce and sell its products under the same brand name. Hence, a monopolistic firm enjoys a certain degree of monopoly due to the existence of the brand name.
Simialrly, the AR curve (or demand curve) and the MR curve faced by a monopolistic firm and monopoly firm are downward sloping.