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.
Long Run Pricing and Output for the Monopolistically Competitive Firm. Unlike a monopoly industry, new firms can enter the monopolistically competitive industry. And like a perfectly competitive industry, economic profits attract new firms seeking a share of those profits into the industry.onopolistic Competition and Oligopoly. Characteristics of Monopolistic Competition. We begin our analysis by looking at a model of monopolistic competition. As the name monopolistic competition suggests, the industry shares characteristics of both a perfectly competitive industry and a monopoly.