AP微观经济学6.ppt

8 Monopoly Monopoly Amonopolyischaracterizedby asinglesellerofawell definedproductforwhichtherearenogoodsubstituteshighbarrierstotheentryofotherfirmsintothemarketfortheproductTypesofbarriersLegalbarrierstoentrycreatelegalmonopoly Alegalmonopolyisamarketinwhichcompetitionandentryarerestrictedbythegrantingofapublicfranchise governmentlicense patentorcopyright Example radioandtelevisionstationNaturalbarrierstoentrycreatenaturalmonopoly whichisanindustryinwhichonefirmcansupplytheentiremarketatalowerpricethantwoormorefirmscan Economiesofscale Example electricutility Characteristics Numbersofsellers onesellerAvailabilityofsubstitutes noDegreeofelasticity generallyinelasticPricingpolicy price makerBarrierstoentry exit highEconomicprofits yesP MC P MR Firmandmarket P Q ATC MC Q P MR MCFindthepointonDDecideP andQ Profit D MR Dead weightloss P Q ACandMC Qm Pm DWL resourcescouldhavebeenutilizedtoproducegoodsandareinsteadtotallywasted Profit D MR Consumersurplus DWL Pc Qc PriceDiscrimination before Pricediscriminationisthepracticeofchargingdifferentconsumersdifferentpricesforthesameproductorservice Price Quantity Demand ATC 70 50 110 2000 90 110 190 1200 Profit 3200 PriceDiscrimination after Conditions Consumershavedifferentpriceelasticity Higherpriceforlowerelasticityconsumers Nochancefortheresaleoftheproduct PriceDiscrimination Forpricediscriminationtoworkthesellermust Downwardslopingdemandcurve pricesearcher AtleasttwoidentifiablegroupsofcustomerswithdifferentpriceelasticitiesofdemandfortheproductPreventthecustomerspayingthelowerpricefromresellingtheproducttothecustomerspayingthehigherprice noarbitrage Pricediscriminationreducesthisinefficiencybyincreasingoutputtowardthequantitywheremarginalbenefitequalsmarginalcost andthedeadweightlossissmaller ExtremeCase Ifitwerepossibleforthemonopolisttochargeeachconsumerthemaximumtheyarewillingtopayforeachunit wherewouldbenodeadweightloss sinceamonopolistwouldproducethesamequantityasunderperfectcompetition Withperfectpricediscriminationtheconsumersurpluswouldallbecapturedbythemonopolist NaturalMonopoly Whentheaveragecostofproductionforasinglefirmisfallingthroughouttherelevantrangeofconsumerdemand wesaythattheindustryisanaturalmonopoly Largeeconomiesofscaleinanindustrypresentsignificantbarrierstoentry GovernmentRegulation Regulatorsoftenattempttoincreasecompetitionandefficiencythrougheffortstoreduceartificialbarrierstotrade suchaslicensingrequirement quotas andtariffs GovernmentregulationAveragecostpricingisthemorecommonformofregulationatthepointwhereATC D Thiswill Increaseoutputanddecreaseprice Increasesocialwelfare allocativeefficiency Ensurethemonopolistanormalprofit butnoeconomicprofit sinceprice ATC Marginalcostpricingwhichisalsoreferredtousefficientregulation forcesthemonopolisttoreducepricetothepointwhereMC D thiswill Increaseoutputandreduceprice CausesthemonopolisttoincuralosssincepriceisbelowATC Suchasolutionrequiresagovernmentsubsidyinordertoprovidethefirmwithanormalprofit Anotherwayof regulating amonopolyisforthegovernmenttosellthemonopolyrighttothehighestbidder LossC Unregulatedandregulatedmonopoly P Q ATC MC QA PA ProfitA MR D PB PC QB QC Unregulatedandregulatedmonopoly Inefficiencyofmonopoly ConcentrationMeasures ConcentrationmeasuresLernerIndex P MC P Thegreatertheindex thegreaterthemarketpowerTheHerfindahl HirschmanIndex HHI thesumofthesquaresofthemarketsharesofthelargestfirmsinthemarket limitation bothofoursimpleconcentrationmeasuresisthatbarrierstoentryarenotconsideredineithercase Evenafirmwithhighmarketsharemaynothavemuchpricingpowerifbarrierstoentryarelowandthereispotentialcompetition 9 Monopolisticcompetition 15 Characteristics Numbersofsellers oligopoly monopoly minATC P MC P MRThemostcommonmarketstructureintheUS Waystocompete Sincesubstitutesarefullyavailableandaweakentrybarrier amonopolisticfirmmustdistinguishitsproductsfromhisrivalsthroughnon pricecompetition Brandname storename shoppers card rewardsforfrequentcustomers etc OngoinginnovationAdvertisingNewdesigning Profits Shortrunprofits P Q Q P D MR MR MCFindthepointonDDecideP andQ Losses Shortrunlosses P Q Q P D MR MR MCFindthepointonDDecideP andQ Longrunequilibrium P Q Q P ATC MC D MR P ATCEcoProfits 0P minATCP MCP MR Short RunandLong RunOutputunderMonopolisticCompetition Short runoutputdecisionforafirm Long runoutputdecisionforafirm Economicprofit TheentryofnewfirmshiftsthedemandcurvefacedbyeachindividualfirmdowntothepointwhereP ATCNoeconomicprofit Compareperfectandmonopolisticcompetition 10 Oligopoly Characteristics Numbersofsellers fewsellerswhohavesomecontrolofmarketshare interdependenceAvailabilityofsubstitutes fewerSimilarityofproducts identicalordifferentiatedPricingpolicy interdependenceinpricingBarrierstoentry exit significantEfficiency inefficiencyEconomicprofits yesP MC P MRThedominantmarketstructureintheUS Thekinkeddemandcurvemodelofoligopoly Thekinkeddemandcurvemodelofoligopolyisbasedontheassumptionthateachfirmbelievesthatifitraisesitsprice otherswillnotfollow butifitcutsitsprice otherfirmswillcuttheirs BetweenrangeAandB theoptimumQisconstant can tdeterminepriceQkistheprofit maximizinglevelofoutputandthepriceatwhichthekinkislocatedisthefirm sprofitmaximizingprice Shortcoming itisincompletebecausewhatdeterminesthemarketprice wherethekinkislocated isoutsidethescopeofthemodel Otheroligopolymodels Priceleadership ifthereisapriceleaderamongotheroligopolists theleadercansetthepricetomaximizeprofitsandtheotherfirmssimplypriceatthesamelevel Cooperativenon collusiveactivities basedontheinterdependenceofoligopolists Collusiveoligopolies rivalsdividemarketamongthemselves productspecializations agreementtochargehigherprices Gametheory Nas