However, in general the effect of a vertical merger is ambiguous. It depends upon the specifics of market structure, the shapes of demand curves and the shapes of cost curves. For instance, if subsidiaries are forced to buy from the parent firm even if this is costly, then this may promote inefficiency. Netscape vs. Microsoft Refer to exhibit 11-4 to determine whether the consumers prefer a Microsoft monopoly or Netscape Monopoly. The theory of markets in which there are many similar but differentiated products.
Monopolistic competition contains some characteristic of monopoly and some of perfect competition.
The demand curve facing a monopolistically competitive firm is neither as steep as in monopoly nor as flat as in perfect competition. The production of a product that is unique but has many close substitutes.