This means that once the transfer agents at the bank medallion stamp the bond, it is highly liquid on the second market. Thus, a bond is a form of loan or IOU: the holder of the bond is the lender (creditor), the issuer of the bond is the borrower (debtor), and the coupon is the interest. Bonds provide the borrower with external funds to finance long-term investments, or, in the case of government bonds, to finance current expenditure.
Chamberlainâs monopolistic competition is the blending of competition and monopoly. The most distinguishing feature of monopolistic competition is that the products of various firms are not identical but different although they are close substitutes for each other.
Allocative Inefficiency of a Single-Price Monopoly. 1  The difference between the value of a good and its price is consumer surplus. 2  A single-price monopoly restricts output and charges a higher price, reducing consumer surplus. 3  While the monopoly gets part of this reduction, another part is simply lost.