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.
1 Because there is only one firm (or essentially only one firm) in a monopoly, the monopoly's firm demand curve is identical to the market demand curve, and the monopoly firm need not consider what it's competitors are pricing at. Because of this lack of competition, monopoly firms will make an economic profit. 2  This would normally cause other firms to enter the market. 3  For this market to remain a monopolistic one, there must be some barrier to entry.