PS5

imperfect competition

between mono and perfect compe; oligo / mono compe

concentration ratio

tính bằng phần trăm top 4 cty

As a group, oligopolists would always be better off if they would act collectively

as a mono

When oligo act as a group, they will produce…

produce small quantity, p > MC

for oligo to make highest profit

price = mono, outcome = mono

OPEC

group control oil production; cartel

Antitrust laws

prevent oligopolists from acting in ways that make markets less competitive

with a math that oligo dont collude,…

increase production until they dont have profit

oligo dont collude, they will have 2 effect

output: p>MC so sell 1 more unit will increase profit

price: increase production => increase total sold => decrease price and profit

oligo provide reason that free trade benefit all, because…

increase firms, price falls

increased competition => smaller DWL

differences between mono and perfect compe:

mono: downward demand curve; have differentiated products; p= ATC > MC=MR long run; Q not at min ATC; excess capacity in long run

perfect: horizontal demand curve; identical products; p=ATC=MC=MR long run; Q at min ATC; efficient scale in long run

Long run mono compe?

p = ATC

short run mono panel?

ATC có thể =,>,<price

source of inefficiency

new entry:

Business-stealing externality (existing firms lose cus and p)

Product-variety externality

•Resale price maintenance (fair trade)

prevent competing on price (limit bundle, discounts…

Predatory pricing

charge too low price

=> anticompetitive, drive some firm out of market

Tying

Offer two goods together at a single price => Expand market power

Skeptics: Cannot increase market power by binding two goods together

Form of price discrimination: Tying may increase profit

Your travel agent provides a list of several hundred local hotels, and a Sheraton. In this case, the Sheraton brand-name is likely to be used as a signal of

quality when quality cannot be easily judged

A recent outbreak of hepatitis was linked to a national fast-food restaurant chain. This is an example of a case in which

brand name identity can be detrimental to the profitability of a firm

tốn nhiều x để đổi lấy y

receive higher marginal utility from y than x

để nâng indifference curve cao hơn (đã có optimun ở dưới)

price x/y giảm

income tăng

effect of change in price lead to

subs effect: ở 1 điểm khác trên cùng indifference curve

income effect: shift sang curve cao hơn

có income cao, đã có optimum, giá y đột nhiên giảm

giống income effect, Qx giữ nguyên, Qy tăng, shift sang curve cao hơn

slope của budget và indiff xác định bằng

budget = relative price

indiff = MRS