blog post #4

The market for college is a Monopolistic competition.  In a monopolistic competition all firms share a very small amount of power within the market and each firms decisions have very small affect on others.  Colleges can vary the cost of attendance independently from other colleges and would see a change in supply and demand which is monopolistic in a small scale.

Competition between colleges is rather low because firms have freedom to enter if they want and there isn't any change to the market, its getting larger.  The services offered from college to college are very close substitutes which allows them to control price and results in high elasticity.

For college to maximize profits in a monopolistic competition they have to find where the most people will attend at a given cost of attendance.  Creating demand over other competitive college can be done by lowering the cost of attendance or by raising the supply curve to give more back to it's students even if that raises cost of attendance.

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