Diese Präsentation wurde erfolgreich gemeldet.
Wir verwenden Ihre LinkedIn Profilangaben und Informationen zu Ihren Aktivitäten, um Anzeigen zu personalisieren und Ihnen relevantere Inhalte anzuzeigen. Sie können Ihre Anzeigeneinstellungen jederzeit ändern.

1

Teilen

Herunterladen, um offline zu lesen

Monopoly types

Herunterladen, um offline zu lesen

asdf

Ähnliche Bücher

Kostenlos mit einer 30-tägigen Testversion von Scribd

Alle anzeigen

Ähnliche Hörbücher

Kostenlos mit einer 30-tägigen Testversion von Scribd

Alle anzeigen

Monopoly types

  1. 1. How would your life change if there was only one firm who: •Sold groceries •Provided university education •Fixed cars Bellringer Bade/Parkin Ch16
  2. 2. Next week • 3 lessons of new info • Logical break for exam, 2 this quarter • 2 review days, exam on following Monday or just 1 review day and exam on Friday • Conflicts with other classes?
  3. 3. Perfect Competition • P = MR = Demand • Good for consumers? • Good for firms?
  4. 4. Economic Competition Today the lack thereof • 4 basic market types: – Perfect Competition – Monopolistic Competition – Oligopoly – Monopoly – monopsony • Measures price/nonprice competition, and product differentiation
  5. 5. Monopoly Market Model A market for a good/service with one dominate seller Firm has total “pricing power” The Ultimate Price MAKER! “barriers to entry” 3 Causes: 1. Private property or resources 2. Government 3. Lower cost production
  6. 6. Types of Monopoly • Geographic • “fences” • Only firm in a certain area • Small towns • Mexican food? • Other example?
  7. 7. Types of Monopoly • Government • Granted by the government • Quality issues
  8. 8. Types of Monopoly • Technological • (Patents) • (Copyrights) • (Trade secrets) • Due to technology • Software, biotechnology, artistic • examples Source: Root computing
  9. 9. Types of Monopoly • Natural • Firm can supply at lower cost than competition • Ex: firm SRATC1 vs. SRATC2 • Examples from US or World History?
  10. 10. On your white boards Name the type of monopoly 1. Popcorn at Harkins movie theater 2. Interstate Highways like I-10 3. The only mechanic in a small town 4. School lunches at FWHS 5. Wilcox, Arizona Wal-Mart 6. Secret Formula for Coca-Cola 7. US military 8. Sun Tran transportation 9. Facebook (?) 10. Gasoline in Mexico or Venezuela
  11. 11. A C T I V E L E A R N I N G 1 A monopoly’s revenue 13 Q P TR AR MR 0 $4.5 0 1 4.00 2 3.50 3 3.00 4 2.50 5 2.00 6 1.50 n.a. Common Grounds is the only seller of cappuccinos in town. The table shows the market demand for cappuccinos. Fill in the missing spaces of the table. What is the relation between P and AR? Between P and MR?
  12. 12. A C T I V E L E A R N I N G 1 Answers 14 Here, P = AR, same as for a competitive firm. Here, MR < P, whereas MR = P for a competitive firm. 1.506 2.005 2.504 3.003 3.502 1.50 2.00 2.50 3.00 3.50 $4.004.001 n.a. 9 10 10 9 7 4 $ 0$4.500 MRARTRPQ –1 0 1 2 3 $4
  13. 13. Common Grounds’ D and MR Curves -3 -2 -1 0 1 2 3 4 5 0 1 2 3 4 5 6 7 Q P, MR MR $ Demand curve (P) 1.506 2.005 2.504 3.003 3.502 4.001 $4.500 MRPQ –1 0 1 2 3 $4
  14. 14. MONOPOLY 16 Understanding the Monopolist’s MR • Increasing Q has two effects on revenue: – Output effect: higher output raises revenue – Price effect: lower price reduces revenue • To sell a larger Q, the monopolist must reduce the price on all the units it sells. • Hence, MR < P • MR could even be negative if the price effect exceeds the output effect (e.g., when Common Grounds increases Q from 5 to 6).
  15. 15. MONOPOLY 17 Profit-Maximization • Like a competitive firm, a monopolist maximizes profit by producing the quantity where MR = MC. • Once the monopolist identifies this quantity, it sets the highest price consumers are willing to pay for that quantity. • It finds this price from the D curve.
  16. 16. MONOPOLY 18 Profit-Maximization 1. The profit- maximizing Q is where MR = MC. 2. Find P from the demand curve at this Q. Quantity Costs and Revenue MR D MC Profit-maximizing output P2 Q P1
  17. 17. MONOPOLY 19 The Monopolist’s Profit As with a competitive firm, the monopolist’s profit equals (P – ATC) x Q Quantity Costs and Revenue ATC D MR MC Q P ATC
  18. 18. A Monopoly Does Not Have an S Curve A competitive firm – takes P as given – has a supply curve that shows how its Q depends on P. A monopoly firm – is a “price-maker,” not a “price-taker” – Q does not depend on P; rather, Q and P are jointly determined by MC, MR, and the demand curve. So there is no supply curve for monopoly.
  19. 19. MONOPOLY 21 The Welfare Cost of Monopoly • Recall: In a competitive market equilibrium, P = MC and total surplus is maximized. • In the monopoly eq’m, P > MR = MC – The value to buyers of an additional unit (P) exceeds the cost of the resources needed to produce that unit (MC). – The monopoly Q is too low – could increase total surplus with a larger Q. – Thus, monopoly results in a deadweight loss.
  20. 20. P = MC Deadweight loss P MC The Welfare Cost of Monopoly Competitive eq’m: quantity = QC P = MC total surplus is maximized Monopoly eq’m: quantity = QM P > MC deadweight loss Quantity Price D MR MC QM QC
  21. 21. MONOPOLY 23 Public Policy Toward Monopolies • Increasing competition with antitrust laws – Ban some anticompetitive practices, allow govt to break up monopolies. – E.g., Sherman Antitrust Act (1890), Clayton Act (1914) • Regulation – Govt agencies set the monopolist’s price. – For natural monopolies, MC < ATC at all Q, so marginal cost pricing would result in losses. – If so, regulators might subsidize the monopolist or set P = ATC for zero economic profit.
  22. 22. 25 Public Policy Toward Monopolies • Public ownership – Example: U.S. Postal Service – Problem: Public ownership is usually less efficient since no profit motive to minimize costs • Doing nothing – The foregoing policies all have drawbacks, so the best policy may be no policy. – Myspace, ipods, google?, facebook?
  23. 23. Homework, due Friday, end of class 1. Read ch 16 Page 428, #1,2, 4, 9 ,10
  • FirmanesFabula

    Aug. 28, 2016

asdf

Aufrufe

Aufrufe insgesamt

400

Auf Slideshare

0

Aus Einbettungen

0

Anzahl der Einbettungen

6

Befehle

Downloads

1

Geteilt

0

Kommentare

0

Likes

1

×