The Theory of Imperfect Competition Assumptions of the Model Imagine an industry consisting of a number of firms producing differentiated products We expect a firm To sell more the larger the total demand for its industrys product and the higher the prices charged by its rivals To sell less the greater the number of firms in the industry and the higher its own price Copyright C 2003 Pearson Education, Inc Slide 6-18Copyright © 2003 Pearson Education, Inc. Slide 6-18 • Assumptions of the Model – Imagine an industry consisting of a number of firms producing differentiated products. – We expect a firm: – To sell more the larger the total demand for its industry’s product and the higher the prices charged by its rivals – To sell less the greater the number of firms in the industry and the higher its own price The Theory of Imperfect Competition