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Monopolistic competitive market

religion: a case study of Hindu
Presented by :
Priyank Sinha
Manohar Giri
Mayur Gupta


Objective of the case-study
Study of the market behaviour of the Hindu temples
in India.
Examine the market structure & market potential.
Prior similar studies conducted
Adam smiths study on Medieval Catholic Churches.
Iannacccones insights on public religion.
Relevance of these studies in Indian context.

Tool of research Survey.
Area of study State of West Bengal

- Annual growth rate of place of worship in W.B. >

compared to national growth rate of same.
- % share of no of places of worship in W.B. 1991(
8.41%) n 2001 (9.52%) > other states in country.
- Sample Size: 18 temples ( Kolkata and North 24 pargans ).
- With G.Rate of 8.6% and 11.7 %

- Average no of visitors : 80180/year (220/day).

- 5% of Avg. Visitors surveyed/ day to estimate the revenue


Estimation of Cost and Revenues

Total Cost of temple/day is a linear function of no.

of daily visitors of temple.

TC= 107.9967 + 0.2851697*Vq
TC= Total Cost / day incurred by temple
Vq= No of daily visitors
If Vq increses, TC increases.
AC function and MC function of a temple are
derived from this equntion(Cost Function).

AR- average revenue earned by temples
Fq- Freq of visit by a visitor

Nature of the Market

Ar is slightly Negatively Sloped indicating it

doesnt follow Monopoly.

A large number of small temples with easy entry
and exit like perfect competition
The actions of any single temple do not have
significant effect on other temples in the market monopolistic competition model rather than the
pure monopoly model.

Profit maximizing output in monopolistic

occurs at the number of visitors (Fq ) where
P* is determined by Demand Curve.
By solving Equation for MC, AR and MR we get
the profit maximizing output, Fq =320 and
Estimated Fq* (320)> Fq (220)
Estimated P* < P average contribution (5.21)
made by a visitor per visit to a temple.

Like monopolists, Hindu temples earned short-run economic profits

when cost of land was not significant(Fig. 1). Those economic profits
induced other temples enter into the market.
the downward shift of the long-run AR curve
the long-run AC curve in the case of temples shifts upwards, because in
the long-run if the rent of land is incorporated, then the average costs
incurred by the temples increase.
some under the table payments, which ultimately increase the total
cost of running the temples in the long-run. As a result, the profits
earned from the temples decline in the long-run. Hence, it may be
inferred that each temple earns only the normal profit in the long-run.