Ebook Price theory amp; Applications (8th edition): Part 2
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Ebook Price theory amp; Applications (8th edition): Part 2
www.downloadslide.comCHAPTER11Market Power, Collusion, and OligopolyMarket power is an elusive goal. It is limited everywhere by the threat of entry. Ebook Price theory amp; Applications (8th edition): Part 2 Even a firm producing a unique product with no close substitutes might not be able to engage in monopoly pricing, because the profits that it would earn by doing so would lure entrants and destroy its market position.But market power can be highly profitable to those who achieve it. and is therefor Ebook Price theory amp; Applications (8th edition): Part 2e avidly pursued. In this chapter, we will look first at some of the strategies that firms employ in their quest for a monopoly position. These can inEbook Price theory amp; Applications (8th edition): Part 2
clude mergers, predatory pricing, and /air trade agreements. We will examine each strategy and each strategy’s limits. We will also see that activitiewww.downloadslide.comCHAPTER11Market Power, Collusion, and OligopolyMarket power is an elusive goal. It is limited everywhere by the threat of entry. Ebook Price theory amp; Applications (8th edition): Part 2st straightforward and common methods of trying to monopolize a market. It Is important enough that we devote an entire section to it. Section 11.2. Using tools from the theory of games, we will see why collusion Is often doomed to fall.We will then see that a collusive arrangement among firms that Ebook Price theory amp; Applications (8th edition): Part 2would ordinarily collapse under its own weight can at times be supported by various forms of regulation. This discussion occupies Section 11.3. AlthouEbook Price theory amp; Applications (8th edition): Part 2
gh regulation sometimes plays this role, it also plays a variety of others, and there are a great number of theories of the regulatory process. We wilwww.downloadslide.comCHAPTER11Market Power, Collusion, and OligopolyMarket power is an elusive goal. It is limited everywhere by the threat of entry. Ebook Price theory amp; Applications (8th edition): Part 2pter 10) a simple model of monopoly behavior, which ignores the firm’s need to respond to other firms’ actions. In Section 11.4. we will survey some theories of oligopoly that provide a starting point for thinking about industries with small numbers of firms, each enjoying some monopoly power but ea Ebook Price theory amp; Applications (8th edition): Part 2ch affected by the others’ behavior. Under this heading, we will consider some classical models of oligopoly and the contemporary theory of contestablEbook Price theory amp; Applications (8th edition): Part 2
e markets. In Section 11.5. we will look at the related theory of monopolistic competition, which also tries to model firms that exercise some degree www.downloadslide.comCHAPTER11Market Power, Collusion, and OligopolyMarket power is an elusive goal. It is limited everywhere by the threat of entry. Ebook Price theory amp; Applications (8th edition): Part 2cxxm:mcz« iczaan Lurusf rvMT.vt ix n«B u aiilKcal :xrxx: M if 1XX ứ riĩSKRMCí nén Iimaxr r«ccr« t358Horizontal integration A merger of firms that produce the same product.Vertical integration A merger between a firm that produces an input and a firm that uses that input.Dangerous Curvewww.downloadsl Ebook Price theory amp; Applications (8th edition): Part 2ide.com CHAPTER 1111.1 Acquiring Market PowerIn this section, we will explore some methods that firms either use or are alleged to use in their attempEbook Price theory amp; Applications (8th edition): Part 2
ts to acquire and exploit market power. We will explore the limits of these methods, and we will learn that they are not always what they seem.Mergerswww.downloadslide.comCHAPTER11Market Power, Collusion, and OligopolyMarket power is an elusive goal. It is limited everywhere by the threat of entry. Ebook Price theory amp; Applications (8th edition): Part 2ation combines two or more producers of the same product. An example would be the combination of three computer manufacturers like Dell, Gateway, and IBM into a single company. Vertical integration combines firms one of which produces inputs for the others production processes. An example would be t Ebook Price theory amp; Applications (8th edition): Part 2he merger of a computer manufacturer (like Dell) with a chip manufacturer (like Intel).Horizontal IntegrationThere are essentially two different reasoEbook Price theory amp; Applications (8th edition): Part 2
ns why firms might want to merge horizontally. First, there may be economies of scale or other increased efficiencies associated with size so that a lwww.downloadslide.comCHAPTER11Market Power, Collusion, and OligopolyMarket power is an elusive goal. It is limited everywhere by the threat of entry. Ebook Price theory amp; Applications (8th edition): Part 2rse, both motives may be present in a single merger.From a welfare point of view, mergers are desirable insofar as they reduce costs, and they are undesirable insofar as they create monopoly power. Exhibit 11.1 illustrates the trade-off. We assume that the industry is initially competitive, with mar Ebook Price theory amp; Applications (8th edition): Part 2ginal cost curve AÍC. (The marginal cost curve is drawn horizontally in order to simplify the diagram; nothing of importance depends on this simplificEbook Price theory amp; Applications (8th edition): Part 2
ation.) If the firms in the industry merge, technical efficiencies will lower the marginal cost curve to AfC, but they will also enable the new, largewww.downloadslide.comCHAPTER11Market Power, Collusion, and OligopolyMarket power is an elusive goal. It is limited everywhere by the threat of entry. Ebook Price theory amp; Applications (8th edition): Part 2 merger are ambiguous. There is a gain of F + G, representing the cost savings due to greater efficiency (the rectangle F + G has area equal to Q'times the cost savings per unit). There is also a loss of £, due to the reduction in output. Which of these is greater will vary from one individual case Ebook Price theory amp; Applications (8th edition): Part 2to another.The analysis here is incomplete if it is possible for another firm to enter the market. Even if the new entrant has the relatively high marEbook Price theory amp; Applications (8th edition): Part 2
ginal cost curve AfC, it can undercut the price P'. Sufficiently many such new entrants—or even just the threat of new entrants—will drive the market www.downloadslide.comCHAPTER11Market Power, Collusion, and OligopolyMarket power is an elusive goal. It is limited everywhere by the threat of entry. Ebook Price theory amp; Applications (8th edition): Part 2er than the competitive price p, and both consumers and producers gain from the merger.Exercise 11.1 Suppose that the merger does not reduce costs at all. so that MC = MƠ. Draw the appropriate graph. In this case does the merger have an unambiguous effect on social welfare?Ccrngtf 10C«4J# ADrjfri?*- Ebook Price theory amp; Applications (8th edition): Part 2/fD "tale«uf«r. E>**dectMSKcctfctiuxy u 0C<1 a?e&xlỈCZ«Lznctii rr.M*/ Lu úHstd UM u* rjxniMC dm ax x&culh K2K".iuun LuiLof niK-.Mi ±N HIK >2M m ii HZiEbook Price theory amp; Applications (8th edition): Part 2
tzMU ttrr.nzu nzurtwww.downloadslide.comMARKET POWER. COLLUSION. ANO OLIGOPOLY03»EXHIBIT 11.1A Horizontal MergerQuantityBefore MergerAfter Mergerwww.downloadslide.comCHAPTER11Market Power, Collusion, and OligopolyMarket power is an elusive goal. It is limited everywhere by the threat of entry. www.downloadslide.comCHAPTER11Market Power, Collusion, and OligopolyMarket power is an elusive goal. It is limited everywhere by the threat of entry.Gọi ngay
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