Ebook Managerial economics and business strategy: Part 2
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Ebook Managerial economics and business strategy: Part 2
https://khothuvien.conizBasic Oligopoly ModelsHEADLINECrude Oil Prices Fall, but Consumers in Some Areas See No Relief at the PumpThanks (O a recent d Ebook Managerial economics and business strategy: Part 2decline in crude oil prices, consumers in most locations recently enjoyed lower gasoline prices. In a few isolated areas, however, consumers cried foul because gasoline retailers did not pass on the price reductions to those who pay at the pump. Consumer groups argued that this corroborated their cl Ebook Managerial economics and business strategy: Part 2aim that gasoline retailers in these areas were colluding in order to earn monopoly profits. For obvious reasons, the gasoline retailers involved deniEbook Managerial economics and business strategy: Part 2
ed the allegations.Based on the evidence, do you think that gasoline stations in these areas were colluding in order to earn monopoly profits? Explainhttps://khothuvien.conizBasic Oligopoly ModelsHEADLINECrude Oil Prices Fall, but Consumers in Some Areas See No Relief at the PumpThanks (O a recent d Ebook Managerial economics and business strategy: Part 2igopoly environments.LO2 Identify the conditions under which a firm operates in a Sweezy, Cournot, Stackelberg, or Bertrand oligopoly, and the ramifications of each type of oligopoly for optimal pricing decisions, output decisions, and firm profits.LO3 Apply reaction |or best-response) functions to Ebook Managerial economics and business strategy: Part 2identify optimal decisions and likely competitor responses in oligopoly settingsLO4 Identify the conditions for a contestable market, and explain theEbook Managerial economics and business strategy: Part 2
ramifications for market power and the sustainability of long-run profits.325326Managerial Economics and Business SlratcgyINTRODUCTIONUp until now. ouhttps://khothuvien.conizBasic Oligopoly ModelsHEADLINECrude Oil Prices Fall, but Consumers in Some Areas See No Relief at the PumpThanks (O a recent d Ebook Managerial economics and business strategy: Part 2on in perfectly competitive and monopolistically competitive markets. In these types of markets, so many firms are competing with one another that no individual firm has any effect on other firms in the market. At the other extreme, we examined profit maximization in a monopoly market. In this insta Ebook Managerial economics and business strategy: Part 2nce there is only one firm in the market, and strategic interactions among firms thus are irrelevant.This chapter is the first of two chapters in whicEbook Managerial economics and business strategy: Part 2
h we examine managerial decisions in oligopoly markets. Here we focus on basic output and pricing decisions in four specific types of oligopolies: Swehttps://khothuvien.conizBasic Oligopoly ModelsHEADLINECrude Oil Prices Fall, but Consumers in Some Areas See No Relief at the PumpThanks (O a recent d Ebook Managerial economics and business strategy: Part 2ing, research and development, entry into an industry, and so forth. First, let US briefly review what is meant by the term oligopoly.CONDITIONS FOR OLIGOPOLYoligopoly A market structure in which tliere are only a few firms, each of which is large relative to the total industry.Oligopoly refers to a Ebook Managerial economics and business strategy: Part 2 situation w here there are relatively few large firms in an industry. No explicit number of firms is required for oligopoly, but the number usually iEbook Managerial economics and business strategy: Part 2
s somew here between 2 and 10. The products the firms offer may be either identical (as in a perfectly competitive market) or differentiated (as in a https://khothuvien.conizBasic Oligopoly ModelsHEADLINECrude Oil Prices Fall, but Consumers in Some Areas See No Relief at the PumpThanks (O a recent d Ebook Managerial economics and business strategy: Part 2ket Structures: in fact, the next chapter is devoted entirely to the analysis of situations that arise under oligopoly. But from the view point of the manager, a firm operating in an oligopoly setting is the most difficult to manage. The key reason is that there are few firms in an oligopolistic mar Ebook Managerial economics and business strategy: Part 2ket and the manager must consider the likely impact of her or his decisions on the decisions of other firms in the industry. Moreover, the actions ofEbook Managerial economics and business strategy: Part 2
other firms will have a profound impact on the manager’s optimal decisions. It should be noted that due to the complexity of oligopoly, there is no sihttps://khothuvien.conizBasic Oligopoly ModelsHEADLINECrude Oil Prices Fall, but Consumers in Some Areas See No Relief at the PumpThanks (O a recent d Ebook Managerial economics and business strategy: Part 2nsider a situation wliere several firms selling differentiated products compete in an oligopoly. In determining what price to charge, the manager must consider the impact of his or her decisions on other firms in the industry. For example, if the price for the product is lowered, will other firms lo Ebook Managerial economics and business strategy: Part 2wer their prices or maintain their existing prices? If the price is increased, will other firms do likewise or maintain their current prices? The optiEbook Managerial economics and business strategy: Part 2
mal decision of whether to raise or lower price will depend on how the manager believes other managers will respond. If other firms lower their priceshttps://khothuvien.conizBasic Oligopoly ModelsHEADLINECrude Oil Prices Fall, but Consumers in Some Areas See No Relief at the PumpThanks (O a recent d Ebook Managerial economics and business strategy: Part 2ModelsFIGURE 9-1 A Firm's Demand Depends on Actions of Rivals327As a point of reference, suppose the firm initially is at point B in Figure 9-1. charging a price of Pn. Demand cur e D| is based on the assumption that rivals will match any price change, white l)2 is based on the assumption that they Ebook Managerial economics and business strategy: Part 2will not match a price change. Note that demand is more inelastic when rivals match a price change than when they do not. The reason for this is simplEbook Managerial economics and business strategy: Part 2
e. For a given price reduction, a firm will sell more if rivals do not cut their prices (Dj) than it will if they lower their prices (Dị). In effect, https://khothuvien.conizBasic Oligopoly ModelsHEADLINECrude Oil Prices Fall, but Consumers in Some Areas See No Relief at the PumpThanks (O a recent d Ebook Managerial economics and business strategy: Part 2m will sell more when rivals also raise their prices (Dị) than it will w hen they maintain their existing prices (Dp.Demonstration Problem 9-1Suppose the manager is at point B in Figure 9-1. charging a price of Pq. If (he manager believes rivals will not match price reductions but will match price i Ebook Managerial economics and business strategy: Part 2ncreases, what does the demand for the linn's product look like?Answer:If rivals do not match price reductions, prices below pị} will induce quantitieEbook Managerial economics and business strategy: Part 2
s demanded along curve D>. If rivals do match price increases, prices above pt) will generate quantities demanded along D|. Thus, if the manager beliehttps://khothuvien.conizBasic Oligopoly ModelsHEADLINECrude Oil Prices Fall, but Consumers in Some Areas See No Relief at the PumpThanks (O a recent d Ebook Managerial economics and business strategy: Part 2omics and Business StrategyDemonstration Problem 9-2https://khothuvien.conizBasic Oligopoly ModelsHEADLINECrude Oil Prices Fall, but Consumers in Some Areas See No Relief at the PumpThanks (O a recent dGọi ngay
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