1 WELCOME TO THE REAL WORLD OF MONOPOLISTIC COMPETITION AND OLIGOPOLY Perfect Competition Monopolistic Competition Oligopoly Monopoly THE MAJORITY OF CANADIAN INDUSTRIES DO NOT QUALIFY AS "PERFECTLY COMPETITIVE" NOR AS A "PERFECT MONOPOLY"
2 MONOPOLISTIC COMPETITION STRUCTURE: Relatively Large Numbers of Sellers o Small Market Share Product Differentiation o Product Quality o Services o Location o Advertising and Packaging Easy Entry and Exit CONDUCT: No collusion o Independent actions Non-price competition PERFORMANCE: Allocative inefficiency Productive inefficiency o Excess capacity
3 OLIGOPOLY STRUCTURE: Few Sellers o Large Market Share Product Differentiation o Homogeneous (standardized) or o Heterogeneous (differentiated) Difficult Entry and Exit o Generally high sunk costs CONDUCT: Strong sense of interdependence Non-price competition PERFORMANCE: Allocative inefficiency (price not equal to marginal cost) Productive (technical) efficiency (not clear) Dynamic efficiency (not clear)
4 MEASURES OF CONCENTRATION Two measures commonly used: o Concentration Ratio o Herfindahl Index CONCENTRATION RATIO CRx = % of market accounted for (i.e., market share) by the largest x firms. For example, CR 4 = % of market accounted for by the four largest firms. CR 4 often published based on national production. Problems: o Some markets are local rather than national o World trade has increased competition o Interindustry competition not captured by CR 4 o CR 4 gives no information on relative sizes of top four (e.g., with a CR 4 = 80%, the largest firm might have 65% and the other three just 5% each; or, all might have 20% each).
5 HERFINDAHL INDEX H index = (%S 1 ) 2 + (%S 2 ) 2 + (%S 3 ) 2 + (%S 4 ) 2 + (%S 5 ) (%S n ) 2 Where S 1 is the market share of the first firm, S 2 is the market share of the second firm, and so forth. In the case of a monopoly, H index = (100) 2 = 10,000. This is the maximum value the H index can take. If there were two firms in the industry, with market shares of 75% and 25% respectively, the H index would be: (75) 2 + (25) 2 = 5, = 6,250 If there were 100 firms with 1% of the market each, the H index would be: (1) 2 + (1) 2 + (1) 2 + (1) 2 + (1) 2 + (1) 2 + (1) (1) 2 = 100
6 CR 4 Range CONCENTRATION LEVEL STRUCTURAL DESCRIPTION 75% - 100% very high tight oligopoly 50% - 74% high tight oligopoly 25% - 49% moderate loose oligopoly < 25% low atomistic INDUSTRIAL CONCENTRATION IN CANADA (Mining, Manufacturing, Logging) CR4 Range Industries (number) % of Industries % % % < % CONCLUSION: ONLY 11% OF CANADIAN MANUFACTURING INDUSTRIES (or 15% of sales) ARE "MONOPOLISTICALLY COMPETITIVE" OR APPROACH "PERFECT COMPETITION" (N.B. services are not included) 54% of industries (accounting for 59% of sales) are characterized as "tight oligopolies".
7 OLIGOPOLISTIC INTERDEPENDENCE THE QUESTION IS HOW THEY ACT UPON THAT INTERDEPENDENCE GAME THEORY IS ONE METHOD OF MODELING OLIGOPOLISTIC INTERDEPENDENCE TWO EXTREME CASES PERFECT COLLUSION OUTRIGHT WARFARE (PREDATION)
8 Figure 9-5 PRISIONER'S DILEMMA PAYOFF MATRIX Al s strategies Confess Not confess Confess Bruno s strategies Not confess A 4 C B 1 D Numbers in the cells are years in prison.
9 The Incentive to Cheat P0 Pc Q0 P0 is the cartel price. Q0 is the firm's output share under the cartel. The cartel member makes economic profits. But, if the firm could cheat (undercut the cartel price), it could sell as much as it wanted at the lower price (since the cartel members are assumed not to cheat). Pc is the cheating price. Qc is the firm's output at the cheating price (Note, it is profit maximizing because MC = MR ---- in this case the firm can sell all it wants at Pc so Pc is MR) Look at the difference in profits.. Qc
10 PRICE WARS AND PREDATION PREDATION MEANS PRICING TO DRIVE A RIVAL FROM THE MARKET BUT, A FIRM MIGHT PRICE BELOW COST FOR MANY REASONS SHORT RUN LOSS MINIMIZATION BUILD MARKET SHARE AT TIME OF ENTRY DISCIPLINE RIVALS $ ATC AVC Below ATC Below AVC severe price cutting Q
11 METHODS TO FACILITATE COOPERATION 1) AGREEMENT OVERT COLLUSION (a formal cartel, but difficult to enforce and illegal) COVERT COLLUSION 2) DOMINANT FIRM PRICE LEADERSHIP INFREQUENT CHANGES COMMUNICATIONS LIMIT PRICING (EXCLUDE NEW ENTRANTS) 3) FORMULA PRICING PRICE BOOKS COST-PLUS PRICING DELIVERED PRICING
12 OLIGOPOLIES AND ADVERTISING GIVEN THEIR INTERDEPENDENCE, OLIGOPOLISTS AVOID PRICE COMPETITION THEY DO USE NON-PRICE COMPETITION (MODEL CHANGES, ADVERTISING, BETTER GUARANTEES, ETC. ETC.) ADVERTISING: POSITIVE EFFECTS MORE INFORMATION IS BETTER (MOST ADVERTISING IS INFORMATIVE) ADVERTISING: NEGATIVE EFFECTS MISLEADING ADS BARRIERS TO ENTRY
13 EMPIRICAL TESTING OF THE RELATIONSHIPS STRUCTURE Number of Sellers Barriers to Entry Product Differentiation Number of Buyers PERFORMANCE Technical Efficiency Allocative Efficiency Dynamic Efficiency Equity 1. Can we find a relationship between the number of sellers (measured by the CR, and the level of technical efficiency? How do we measure technical efficiency? a) Percent of industry at or above MOS b) Extent of X-inefficiency Data shows no strong relationship between the CR and a), but some relationship with b)
14 2. Can we find a relationship between the number of sellers (measured by the CR), and the level of allocative efficiency? How do we measure allocative efficiency? a) P = MC is the goal. When P > MC this is associated with economic profits. The existence of economic profits is a measure of allocative inefficiency The CR and economic profit are positively related.
15 3. Can we find a relationship between the number of sellers (measured by the CR, and the level of dynamic efficiency? How do we measure dynamic efficiency? a) Patents b) Expenditures on R&D The relationship between the CR and R&D is concave (R&D goes up as concentration goes up - to a point - and then declines. High R&D $ Low Concentration High
17 COMPETITION POLICY AND REGULATION GOVERNMENT HAS TWO BROAD POLICY METHODS TO DEAL WITH MARKET POWER 1. PROTECT COMPETITION o COMES UNDER THE HEADING OF COMPETITION POLICY REFLECTED IN THE COMPETITION ACT 2. DIRECT REGULATION OF MONOPOLIES o REVIEW CHAPTER 8 (PAGES ) IN ADDITION GOVERNMENT IMPLEMENTS POLICIES TO "IMPROVE" THE MARKET: SOCIAL REGULATION
18 COMPETITION POLICY: TWO MAIN TYPES I Conduct (aimed at firm behaviour) A Price fixing is illegal 1 Reasonableness of the price is no defence 2 Extent of the market controlled is an issue B Other types of conduct are illegal (predatory pricing) C Some types of conduct are reviewable (vertical restraints such as exclusive dealing, exclusive territories, tying, resale price maintenance)
19 II Structure (aimed at industry structure) Up to 1986 no effective control of merger or monopoly A Merger 1 Reviewable, a civil not criminal matter. 2 Government does a cost benefit analysis: anticompetitive effects versus efficiency gains. 3 Hundreds of mergers are reviewed each year. B Monopoly 1 Monopoly is not illegal, "abuse of a dominant position is" 2 "Abuse" can include a lot of practices -- generally includes practices the monopolist employs to maintain its position (e.g., predatory pricing, tying, etc.). 3 Only a few big cases.
20 Types of Mergers AUTOMOBILES JEANS A HORIZONTAL G H B C D E F I W CONGLOMERATE X Y Z VERTICAL STEEL DENIM CLOTH Horizontal Mergers are the main concern They increase industry concentration They can increase interdependence They can result in monopoly or near monopoly
21 CONSPIRACY Amount Date Product Company Convicted $48,000,000 F. Hoffmann-LaRoche Ltd $18,000, Bulk Vitamins BASF Aktiengesellschaft $14,000,000 $14,000, Lysine $5,200, Bulk Vitamins Rhône-Poulenc S.A. Archer Daniels Midland Company Takeda Chemical Industries, Ltd. $4,700, Citric Acid Haarmann & Reimer Corp. $3,500, Lysine Ajinomoto Co. Inc. $2,900, Citric Acid F. Hoffmann-LaRoche Ltd $2,500, Pipe Canada Pipe Company Ltd. $2,500, Bulk Vitamins Daiichi Pharmaceutical Co., Ltd. $2,500, Sorbates Hoechst AG $2,460, Sorbates Daicel Chemical Industries, Ltd. $1,900, Citric Acid Jungbunzlauer Int'l A.G. $1,833,000 Lafarge Canada Inc. Ready Mix $1,833, Concrete Ciment St-Laurent Inc. $1,733,000 Ciment Québec Inc. $1,700, Union Carbide Canada Limited Compressed $1,700, Gas Canadian Liquid Air Ltd. $1,700, Liquid Carbonic Inc. $1,500, Sodium Erythorbate $1,250, Sorbates $1,000, Choline Chloride Pfizer Inc. Ueno Fine Chemicals Industry Ltd. BASF Aktiengesellschaft $1,000, Bulk Vitamins Merck KGaA
22 CONSPIRACIES DIRECTED FROM ABROAD Amount Date Product Company Convicted $12,500, $11,000, Graphite Electrodes SGL Carbon Aktiengesellschaft UCAR Inc. $1,250, Chemical Sumitomo Canada Ltd. $1,250, Insecticide Chemagro Limited $370, Bulk Vitamins Roussel Canada Inc. $250, Fax Paper Mitsubishi Canada Ltd. $250, Graphite Electrodes Tokai Carbon Co., Ltd.
23 RECENT BIG MERGER CASES Superior Propane and ICG, disputed, Superior won on the basis that efficiency gains outweighed anticompetitive effects TD Bank and Canada Trust, had to sell off a number of CT branches BIG ABUSE OF A DOMINANT POSITION CASES (i.e., abusing monopoly position) Tele-Direct (Publications) Inc. (1994) (the Yellow Pages) The D & B Companies of Canada Ltd. (NIELSEN) (1994) (grocery store scanner info) Laidlaw Waste System Ltd. (1991) (garbage pickup on Vancouver Island) The NutraSweet Company (1989) (aspertame, the artificial sweetener)
24 SOCIAL REGULATION WORKPLACE SAFETY PRODUCT SAFETY ENVIRONMENTAL REGULATION OVERREGULATION? SOCIAL REGULATION WAS THE MAIN THE ISSUE. DEREGULATION: LIFTING OF RULES WHERE COMPETITIVE MARKETS COULD WORK Trucking, airlines, railroads Telecommunications (long distance) Natural gas (production) INDUSTRIAL POLICY: REALLY THE COMPOSITE OF COMPETITION POLICY DIRECT REGULATION SOCIAL REGULATION INTERNATIONAL TRADE POLICY LABOUR POLICY ENERGY POLICY R&D POLICY ENVIRONMENTAL POLICY AGRICULTURAL POLICY TRANSPORTATION POLICY ETC., ETC., ETC.
1 Unit 4: Imperfect Competition FOUR MARKET MODELS Perfect Competition Monopolistic Competition Pure Characteristics of Oligopolies: A Few Large Producers (Less than 10) Identical or Differentiated Products
Oligopoly Chapter 16-2 Models of Oligopoly Behavior No single general model of oligopoly behavior exists. Oligopoly An oligopoly is a market structure characterized by: Few firms Either standardized or
Chapter 16 Monopolistic Competition and Oligopoly Market Structure Market structure refers to the physical characteristics of the market within which firms interact It is determined by the number of firms
ECON101 STUDY GUIDE 7 CHAPTER 14 MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) An oligopoly firm is similar to a monopolistically competitive
Economics Chapter 7 Market Structures Perfect competition is a in which a large number of all produce. There are Four Conditions for Perfect Competition: 1. 2. 3. 4. Barriers to Entry Factors that make
Chapter 7: Market Structures Section 3 Objectives 1. Describe characteristics and give examples of monopolistic competition. 2. Explain how firms compete without lowering prices. 3. Understand how firms
Chap 13 Monopolistic Competition and Oligopoly These questions may include topics that were not covered in class and may not be on the exam. MULTIPLE CHOICE. Choose the one alternative that best completes
WSG10 7/7/03 4:24 PM Page 145 10 Market Structure: Duopoly and Oligopoly OVERVIEW An oligopoly is an industry comprising a few firms. A duopoly, which is a special case of oligopoly, is an industry consisting
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) The four-firm concentration ratio equals the percentage of the value of accounted for by the four
Chapter 8 Production Technology and Costs 8.1 Economic Costs and Economic Profit 1) Accountants include costs as part of a firm's costs, while economists include costs. A) explicit; no explicit B) implicit;
Models of Imperfect Competition Monopolistic Competition Oligopoly Models of Imperfect Competition So far, we have discussed two forms of market competition that are difficult to observe in practice Perfect
Market Structure: Oligopoly (Imperfect Competition) I. Characteristics of Imperfectly Competitive Industries A. Monopolistic Competition large number of potential buyers and sellers differentiated product
Name: Date: 1. Most electric, gas, and water companies are examples of: A) unregulated monopolies. B) natural monopolies. C) restricted-input monopolies. D) sunk-cost monopolies. Use the following to answer
LECTURE #15: MICROECONOMICS CHAPTER 17 I. IMPORTANT DEFINITIONS A. Oligopoly: a market structure with a few sellers offering similar or identical products. B. Game Theory: the study of how people behave
Imperfect Competition Oligopoly Chapter 16 Imperfect competition refers to those market structures that fall between perfect competition and pure monopoly. Copyright 2001 by Harcourt, Inc. All rights reserved.
CHAPTER 12 MARKETS WITH MARKET POWER Microeconomics in Context (Goodwin, et al.), 2 nd Edition Chapter Summary Now that you understand the model of a perfectly competitive market, this chapter complicates
CHAPTER 18 MARKETS WITH MARKET POWER Principles of Economics in Context (Goodwin et al.) Chapter Summary Now that you understand the model of a perfectly competitive market, this chapter complicates the
MODULE 64: INTRODUCTION TO OLIGOPOLY Schmidty School of Economics Learning Targets I Can Understand why oligopolists have an incentive to act in ways that reduce their combined profit. Explain why oligopolies
Write down the names of three companies: 1. Company with very little competition. 2. Company with two to three major competitors. 3. Company with many competitors. Which situation do you think describes
Topic 8 Chapter 13 Oligopoly and Monopolistic Competition Econ 203 Topic 8 page 1 Oligopoly: How do firms behave when there are only a few competitors? These firms produce all or most of their industry
Chapter 11: Price-Searcher Markets with High Entry Barriers I. Why are entry barriers sometimes high? A. Economies of Scale in some markets average total costs fall over the full range of output. Therefore
Oligopoly Oligopoly is a market structure in which the number of sellers is small. Oligopoly requires strategic thinking, unlike perfect competition, monopoly, and monopolistic competition. Under perfect
T28 OLIGOPOLY 3/1/15 1. Oligopoly is a market structure in which there are a small number of firms that engage in strategic interactions. If there are only two firms then we refer to the situation as a
Pre-Test Chapter 23 ed17 Multiple Choice Questions 1. The kinked-demand curve model of oligopoly: A. assumes a firm's rivals will ignore a price cut but match a price increase. B. embodies the possibility
CHAPTER 16 OLIGOPOLY FOUR TYPES OF MARKET STRUCTURE Extreme cases PERFECTLY COMPETITION Many firms No barriers to entry Identical products MONOPOLY One firm Huge barriers to entry Unique product In between
Oligopoly PowerPoint Slides prepared by: Andreea CHIRITESCU Eastern Illinois University 1 Oligopoly Only a few sellers Oligopoly Offer similar or identical products Interdependent Game theory How people
A monopolist s marginal revenue is always less than or equal to the price of the good. Marginal revenue is the amount of revenue the firm receives for each additional unit of output. It is the difference
Chapter 7: Market Structures Section 1 Key Terms perfect competition: a market structure in which a large number of firms all produce the same product and no single seller controls supply or prices commodity:
Chapter 7 Monopoly, Oligopoly and Strategy After reading Chapter 7, MONOPOLY, OLIGOPOLY AND STRATEGY, you should be able to: Define the characteristics of Monopoly and Oligopoly, and explain why the are
Name: Class: Date: ID: A Economics Chapter 7 Review Matching a. perfect competition e. imperfect competition b. efficiency f. price and output c. start-up costs g. technological barrier d. commodity h.
CHAPTER 6 MARKET STRUCTURE CHAPTER SUMMARY This chapter presents an economic analysis of market structure. It starts with perfect competition as a benchmark. Potential barriers to entry, that might limit
Chapter 13 MONOPOLISTIC COMPETITION AND OLIGOPOLY Key Concepts Monopolistic Competition The market structure of most industries lies between the extremes of perfect competition and monopoly. Monopolistic
CHAPTER 11: MONOPOLISTIC COMPETITION AND OLIGOPOLY Introduction While perfect competition and monopoly represent the extremes of market structures, most American firms are found in the two market structures
R.E.Marks 1998 Oligopoly 1 R.E.Marks 1998 Oligopoly Oligopoly and Strategic Pricing In this section we consider how firms compete when there are few sellers an oligopolistic market (from the Greek). Small
Chapter 13 Oligopoly: Firms in Less Competitive Markets Prepared by: Fernando & Yvonn Quijano 2008 Prentice Hall Business Publishing Economics R. Glenn Hubbard, Anthony Patrick O Brien, 2e. Competing with
A2 Micro Business Economics Diagrams Advice on drawing diagrams in the exam The right size for a diagram is ½ of a side of A4 don t make them too small if needed, move onto a new side of paper rather than
Market Structures This hand-out gives an overview of the main market structures including perfect competition, monopoly, monopolistic competition, and oligopoly. Summary Chart Perfect Competition Monopoly
Oligopoly and Strategic Behavior MULTIPLE-CHOICE QUESTIONS Like a pure monopoly, an oligopoly is characterized by: a. free entry and exit in the long run. b. free entry and exit in the short run. c. significant
Characteristics of Monopolistic Competition large number of firms differentiated products (ie. substitutes) freedom of entry and exit Examples Upholstered furniture: firms; HHI* = 395 Jewelry and Silverware:
Professor Scholz Posted: 11/10/2009 Economics 101, Problem Set #9, brief answers Due: 11/17/2009 Oligopoly and Monopolistic Competition Please SHOW your work and, if you have room, do the assignment on
INTRODUCTION Questions examined in this chapter include: What determines how much market power a firm has? How do firms in an oligopoly set prices and output? What problems does an oligopoly have in maintaining
Imperfect Market Structure Models (11/10/09) Today: and Monopsony/Oligopsony Thursday: Market Structure, Conduct and erformance Model Exam III 24 th Characteristics Comparisons of Industry Market Structures
Managerial Economics & Business Strategy Chapter 8 Managing in Competitive, Monopolistic, and Monopolistically Competitive Markets I. Perfect Competition Overview Characteristics and profit outlook. Effect
Economics Instructor Miller Oligopoly Practice Problems 1. An oligopolistic industry is characterized by all of the following except A) existence of entry barriers. B) the possibility of reaping long run
Understanding Economics 2nd edition by Mark Lovewell and Khoa Nguyen Chapter 5 Perfect Competition Chapter Objectives! In this chapter you will: " Consider the four market structures, and the main differences
Competition and Market Structure Market Structure MARKET STRUCTURE- nature and degree of competition that exist in an industry or market There are five different types of market structures Pure Competition
ECON 1620 Basic Economics Principles 2010 2011 2 nd Semester Mid term test (1) : 40 multiple choice questions Time allowed : 60 minutes 1. When demand is inelastic the price elasticity of demand is (A)
Final Exam Economics 101 Fall 2003 Wallace Final Exam (Version 1) Answers 1. The marginal revenue product equals A) total revenue divided by total product (output). B) marginal revenue divided by marginal
S209-S220_Krugman2e_PS_Ch15.qxp 9/16/08 9:23 PM Page S-209 Oligopoly chapter: 15 1. The accompanying table presents market share data for the U.S. breakfast cereal market in 2006. Company a. Use the data
Class: Date: ID: A Principles Fall 2013 Midterm 3 Multiple Choice Identify the choice that best completes the statement or answers the question. 1. Trevor s Tire Company produced and sold 500 tires. The
Managerial Economics & Business Strategy Chapter 9 Basic Oligopoly Models Overview I. Conditions for Oligopoly? II. Role of Strategic Interdependence III. Profit Maximization in Four Oligopoly Settings
MBA 640 Survey of Microeconomics Fall 2006, Quiz 6 Name MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) A monopoly is best defined as a firm that
Practice Questions Week 8 Day 1 Multiple Choice Identify the choice that best completes the statement or answers the question. 1. The characteristics of a market that influence the behavior of market participants
Test 2 Review Econ 201, V. Tremblay MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) Barbara left a $25,000 job as an architect to run a catering
Econ 101: Principles of Microeconomics Chapter 15 - Oligopoly Fall 2010 Herriges (ISU) Ch. 15 Oligopoly Fall 2010 1 / 25 Outline 1 Understanding Oligopolies 2 Game Theory Overcoming the Prisoner s Dilemma
Chapter 13 Oligopoly 1 4. Oligopoly A market structure with a small number of firms (usually big) Oligopolists know each other: Strategic interaction: actions of one firm will trigger re-actions of others
Chapter Monopolistic Competition and Oligopoly Review Questions. What are the characteristics of a monopolistically competitive market? What happens to the equilibrium price and quantity in such a market
Microeconomics Topic 7: Contrast market outcomes under monopoly and competition. Reference: N. Gregory Mankiw s rinciples of Microeconomics, 2 nd edition, Chapter 14 (p. 291-314) and Chapter 15 (p. 315-347).
Equilibrium of a firm under perfect competition in the short-run. A firm is under equilibrium at that point where it maximizes its profits. Profit depends upon two factors Revenue Structure Cost Structure
UNIVERSITY OF CALICUT SCHOOL OF DISTANCE EDUCATION BA ECONOMICS III SEMESTER CORE COURSE (2011 Admission onwards) MICRO ECONOMICS - II QUESTION BANK 1. Which of the following industry is most closely approximates
1Oligopoly 19 As you move your cart down the grocery isle, stop in front of the canned soups. You see before maybe four or five different brands of soup. If you stop in front of the frozen pizzas you might
Do not open this exam until told to do so. Department of Economics College of Social and Applied Human Sciences K. Annen, Winter 004 Final (Version ): Intermediate Microeconomics (ECON30) Solutions Final
1 Economics 130-Windward Community College Review Sheet for the Final Exam This final exam is comprehensive in nature and in scope. The test will be divided into two parts: a multiple-choice section and
Chapter 05 Perfect Competition, Monopoly, and Economic Multiple Choice Questions Use Figure 5.1 to answer questions 1-2: Figure 5.1 1. In Figure 5.1 above, what output would a perfect competitor produce?
R. Larry Reynolds Pure Competition urely competitive markets are used as the benchmark to evaluate market P performance. It is generally believed that market structure influences the behavior and performance
Chapter 14. Oligopoly Instructor: JINKOOK LEE Department of Economics / Texas A&M University ECON 202 504 Principles of Microeconomics Oligopoly Market Oligopoly: A market structure in which a small number
Eco 340 Industrial Economics Market Structures: Cartels / Cooperative Oligopoly Prof Dr. Murat Yulek Oligopolistic Markets and the Cartel Competitive market: firms operate independently In other markets,
1 Monopoly Why Monopolies Arise? Monopoly is a rm that is the sole seller of a product without close substitutes. The fundamental cause of monopoly is barriers to entry: A monopoly remains the only seller
Chapter 15: While a competitive firm is a taker, a monopoly firm is a maker. A firm is considered a monopoly if... it is the sole seller of its product. its product does not have close substitutes. The
Characteristics of Market Structure Place on each wall of the classroom a large sign with one of the following market structures: PERFECT COMPETITION MONOPOLISITC COMPETITION MONOPOLY OLIGOPOLY There are
Week 7 - Game Theory and Industrial Organisation The Cournot and Bertrand models are the two basic templates for models of oligopoly; industry structures with a small number of firms. There are a number
WSG8 7/7/03 4:34 PM Page 113 8 Market Structure: Perfect Competition and Monopoly OVERVIEW One of the most important decisions made by a manager is how to price the firm s product. If the firm is a profit
Collusion. Industry profit in an oligopoly (sum of all firms profits) < monopoly profit. Price lower and industry output higher than in a monopoly. Firms lose because of non-cooperative behavior : Each
Mikroekonomia B by Mikolaj Czajkowski Test 12 - Oligopoly Name Group MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) The market structure in which
Contemporary Industrial Organization A Quantitative Approach Lynne Pepall Dan Richards George Norman WILEY John Wiley & Sons, Inc. Contents About the Authors Preface xiii xv Part I Microeconomic Foundations
Economies of scale and international trade In the models discussed so far, differences in prices across countries (the source of gains from trade) were attributed to differences in resources/technology.
ANTICOMPETITIVE PRACTICES 1. Collusion is an agreement, usually secretive, which occurs between two or more persons to deceive, mislead, or defraud others of their legal rights, or to obtain an objective
Chapter 6 Competitive Markets After reading Chapter 6, COMPETITIVE MARKETS, you should be able to: List and explain the characteristics of Perfect Competition and Monopolistic Competition Explain why a
ANSWERS TO END-OF-CHAPTER QUESTIONS 23-1 Briefly indicate the basic characteristics of pure competition, pure monopoly, monopolistic competition, and oligopoly. Under which of these market classifications
Learning Objectives After reading Chapter 13 and working the problems for Chapter 13 in the textbook and in this Workbook, you should be able to do the following things For simultaneous decisions: Explain