中级微观经济学：InformationTechnology课件

1、中级微观经济学：InformationTechnology中级微观经济学：InformationTechnologyInformation TechnologiesComputers, answering machines, FAXes, pagers, cellular phones, Many provide strong complementarities.E.g. email is useful only if lots of people use it - a network externality.And computers are more useful if many peop

2、le use the same software.Information TechnologiesComputInformation TechnologiesBut then switching technologies becomes very costly - lock-in.E.g. Microsoft Windows.How do markets operate when there are switching costs or network externalities?Information TechnologiesBut thCompetition & Switching Cos

3、tsProducers cost per month of providing a network service is c per customer.Customers switching cost is s.Producer offers a one month discount, d.Rate of interest is r.Competition & Switching CostsPCompetition & Switching CostsAll producers set the same nondiscounted price of p per month.When is swi

4、tching producers rational for a customer?Competition & Switching CostsACompetition & Switching CostsCost of not switching is Competition & Switching CostsCCompetition & Switching CostsCost of not switching isCost from switching isCompetition & Switching CostsCCompetition & Switching CostsCost of not

5、 switching isCost from switching isSwitch if Competition & Switching CostsCCompetition & Switching CostsCost of not switching isCost from switching isSwitch if I.e. ifCompetition & Switching CostsCCompetition & Switching CostsSwitch ifI.e. ifProducer competition will ensure at a market equilibrium t

6、hat customers are indifferent between switching or not Competition & Switching CostsSCompetition & Switching CostsAt equilibrium, producer economic profits are zero.I.e. Competition & Switching CostsACompetition & Switching CostsAt equilibrium, producer economic profits are zero.I.e. Since , at equi

7、libriumCompetition & Switching CostsACompetition & Switching CostsAt equilibrium, producer economic profits are zero.I.e. Since , at equilibriumI.e. present-valued producer profit = consumer switching cost.Competition & Switching CostsACompetition & Network ExternalitiesIndividuals 1,1000.Each can b

8、uy one unit of a good providing a network externality.Person v values a unit of the good at nv, where n is the number of persons who buy the good.Competition & Network ExternalCompetition & Network ExternalitiesIndividuals 1,1000.Each can buy one unit of a good providing a network externality.Person

9、 v values a unit of the good at nv, where n is the number of persons who buy the good.At a price p, what is the quantity demanded of the good?Competition & Network ExternalCompetition & Network ExternalitiesIf v is the marginal buyer, valuing the good at nv = p, then all buyers v v value the good mo

10、re, and so buy it.Quantity demanded is n = 1000 - v.So inverse demand is p = n(1000-n).Competition & Network ExternalCompetition & Network Externalities01000nWillingness-to-pay p = n(1000-n)Demand CurveCompetition & Network ExternalCompetition & Network ExternalitiesSuppose all suppliers have the sa

11、me marginal production cost, c.Competition & Network ExternalCompetition & Network Externalities01000nDemand CurveSupply CurvecWillingness-to-pay p = n(1000-n)Competition & Network ExternalCompetition & Network ExternalitiesWhat are the market equilibria?Competition & Network ExternalCompetition & N

12、etwork ExternalitiesWhat are the market equilibria?(a) No buyer buys, no seller supplies.If n = 0, then value nv = 0 for all buyers v, so no buyer buys.If no buyer buys, then no seller supplies.Competition & Network ExternalCompetition & Network Externalities01000nDemand CurveSupply Curve(a)cWilling

13、ness-to-pay p = n(1000-n)Competition & Network ExternalCompetition & Network Externalities01000nDemand CurveSupply Curven(a)cWillingness-to-pay p = n(1000-n)Competition & Network ExternalCompetition & Network ExternalitiesWhat are the market equilibria?(b) A small number, n, of buyers buy.small n sm

14、all network externality value nvgood is bought only by buyers with nv c; i.e. only large v v = c/n.Competition & Network ExternalCompetition & Network Externalities01000nDemand CurveSupply Curven(b)n”(c)(a)cWillingness-to-pay p = n(1000-n)Competition & Network ExternalCompetition & Network Externali

15、tiesWhat are the market equilibria?(c) A large number, n”, of buyers buy.Large n” large network externality value n”vgood is bought only by buyers with nv c; i.e. up to small v v” = c/n”.Competition & Network ExternalCompetition & Network Externalities01000nDemand CurveSupply Curven(b)n”(c)(a)cWhich

16、 equilibrium is likely to occur?Willingness-to-pay p = n(1000-n)Competition & Network ExternalCompetition & Network ExternalitiesSuppose the market expands whenever willingness-to-pay exceeds marginal production cost, c. Competition & Network ExternalCompetition & Network Externalities01000nDemand C

17、urveSupply Curvenn”cWhich equilibrium is likely to occur?Willingness-to-pay p = n(1000-n)Competition & Network ExternalCompetition & Network Externalities01000nDemand CurveSupply Curvenn”cWhich equilibrium is likely to occur?Willingness-to-pay p = n(1000-n)UnstableCompetition & Network ExternalCompe

18、tition & Network Externalities01000nDemand CurveSupply Curven”cWhich equilibrium is likely to occur?Willingness-to-pay p = n(1000-n)Competition & Network ExternalCompetition & Network Externalities01000nDemand CurveSupply Curven”cWhich equilibrium is likely to occur?Willingness-to-pay p = n(1000-n)S

19、tableCompetition & Network ExternalCompetition & Network Externalities01000nDemand CurveSupply Curven”cWhich equilibrium is likely to occur?Willingness-to-pay p = n(1000-n)StableStableCompetition & Network ExternalRights ManagementShould a good be sold outright,licensed for production by others, orr

20、ented?How is the ownership right of the good to be managed?Rights ManagementShould a goodRights ManagementSuppose production costs are negligible.Market demand is p(y).The firm wishes toRights ManagementSuppose produRights ManagementRights ManagementRights ManagementRights ManagementRights Managemen

21、tRights ManagementRights ManagementThe rights owner now allows a free trial period. This causesan increase in consumptionRights ManagementThe rights owRights ManagementThe rights owner now allows a free trial period. This causesan increase in consumptionand a decrease in sales per unit of consumptio

22、nRights ManagementThe rights owRights ManagementThe rights owner now allows a free trial period. This causesincrease in value to all users increase in willingness-to-pay;Rights ManagementThe rights owRights ManagementRights ManagementRights ManagementThe firms problem is now toRights ManagementThe f

23、irms prRights ManagementThe firms problem is now toThis problem must have the same solution asRights ManagementThe firms prRights ManagementThe firms problem is now toThis problem must have the same solution asSo Rights ManagementThe firms prRights ManagementRights ManagementRights Management higher

24、 profitRights Management higher profRights Management lower profitRights Management lower profiSharing Intellectual PropertyProduce a lot for direct sales, or only a little for multiple rentals?Lending books, software.Renting tools, videos etc.Sell movies directly, or only sell to video rental store

25、s, or pay-per-view? When is selling for rental more profitable than selling for personal use only?Sharing Intellectual PropertyPSharing Intellectual PropertyF is the fixed cost of designing the good.c is the constant marginal cost of copying the good.p(y) is the market demand.Direct sales problem is

26、 toSharing Intellectual PropertyFSharing Intellectual PropertyF is the fixed cost of designing the good.c is the constant marginal cost of copying the good.p(y) is the market demand.Direct sales problem is toSharing Intellectual PropertyFSharing Intellectual PropertyIs selling for rental more profit

27、able?Each rental unit is used by k 1 consumers.So y units sold x = ky consumption units.Sharing Intellectual PropertyISharing Intellectual PropertyIs selling for rental more profitable?Each rental unit is used by k 1 consumers.So y units sold x = ky consumption units.Marginal consumers willingness-t

28、o-pay is p(x) = p(ky).Sharing Intellectual PropertyISharing Intellectual PropertyIs selling for rental more profitable?Each rental unit used by k 1 consumers.So y units sold x = ky consumption units.Marginal consumers willingness-to-pay is p(x) = p(ky).Rental transaction cost t reduces willingness-t

29、o-pay to p(ky) - t.Sharing Intellectual PropertyISharing Intellectual PropertyRental transaction cost t reduces willingness-to-pay to p(ky) - t.Rental stores willingness-to-pay isSharing Intellectual PropertyRSharing Intellectual PropertyRental transaction cost t reduces willingness-to-pay to p(ky) - t.Rental stores willingness-to-pay isProducers sale-for-rental problem isSharing Intellectual PropertyRSharing Intellectual PropertyRental transactio