marketpower∶monopolyandmonopsony(编辑修改稿)

marketpower∶monopolyandmonopsony(编辑修改稿)内容摘要：

f Prerecorded Videocassettes 1985 1999 Title Retail Price($) Title Retail Price($) Purple Rain $ Austin Powers $ Raiders of the Lost Ark A Bug’s Life Jane Fonda Workout There’s Something about Mary The Empire Strikes Back TaeBo Workout An Officer and a Gentleman Lethal Weapon 4 Star Trek: The Motion Picture Men in Black Star Wars Armageddon  What Do You Think?  Should producers lower the price of videocassettes to increase sales and revenue? The Pricing of Prerecorded Videocassettes Chapter 10 Slide 61 Sources of Monopoly Power  Why do some firm’s have considerable monopoly power, and others have little or none?  A firm’s monopoly power is determined by the firm’s elasticity of demand. Chapter 10 Slide 62 Sources of Monopoly Power  The firm’s elasticity of demand is determined by: 1) Elasticity of market demand 2) Number of firms 3) The interaction among firms Chapter 10 Slide 63 The Social Costs of Monopoly Power  Monopoly power results in higher prices and lower quantities.  However, does monopoly power make consumers and producers in the aggregate better or worse off? Chapter 10 Slide 64 B A Lost Consumer Surplus Deadweight Loss Because of the higher price, consumers lose A+B and producer gains AC. C Deadweight Loss from Monopoly Power Quantity AR MR MC QC PC Pm Qm $/Q Chapter 10 Slide 65  Rent Seeking  Firms may spend to gain monopoly power Lobbying Advertising Building excess capacity The Social Costs of Monopoly Power Chapter 10 Slide 66  The incentive to engage in monopoly practices is determined by the profit to be gained.  The larger the transfer from consumers to the firm, the larger the social cost of monopoly. The Social Costs of Monopoly Power Chapter 10 Slide 67  Price Regulation  Recall that in petitive markets, price regulation created a deadweight loss.  Question:  What about a monopoly? The Social Costs of Monopoly Power Chapter 10 Slide 68 AR MR MC Pm Qm AC P1 Q1 Marginal revenue curve when price is regulated to be no higher that P1. If left alone, a monopolist produces Qm and charges Pm. If price is lowered to P3 output decreases and a shortage exists. For output levels above Q1 , the original average and marginal revenue curves apply. If price is lowered to PC output increases to its maximum QC and there is no deadweight loss. Price Regulation $/Q Quantity P2 = PC Qc P3 Q3 Q’3 Any price below P4 results in the firm incurring a loss. P4 Chapter 10 Slide 69  Natural Monopoly  A firm that can produce the entire output of an industry at a cost lower than what it would be if there were several firms. The Social Costs of Monopoly Power Chapter 10 Slide 70 Regulating the Price of a Natural Monopoly $/Q Natural monopolies occur because of extensive economies of scale Quantity Chapter 10 Slide 71 MC AC AR MR $/Q Quantity Setting the price at Pr yields the largest possible output。 excess profit is zero. Qr Pr PC QC If the price were regulate to be PC, the firm would lose money and go out of business. Pm Qm Unregulated, the monopolist would produce Qm and charge Pm. Regulating the Price of a Natural Monopoly Chapter 10 Slide 72  Regulation in Practice  It is very difficult to estimate the firm39。 s cost and demand functions because they change with evolving market conditions The Social Costs of Monopoly Power Chapter 10 Slide 73  Regulation in Practice  An alternative pricing techniquerateofreturn regulation allows the firms to set a maximum price based on the expected rate or return that the firm will earn. P = AVC + (D + T + sK)/Q, where  P = price, AVC = average variable cost  D = depreciation, T = taxes s = allowed rate of return, K = firm’s capital stock The Social Costs of Monopoly Power Chapter 10 Slide 74  Regulation in Practice  Using this technique requires hearings to arrive at the respective figures.  The hearing process creates a regulatory lag that may benefit producers or consumers The Social Costs of Monopoly Power Chapter 10 Slide 75 Monopsony  A monopsony is a market in which there is a single buyer.  An oligopsony is a market with only a few buyers.  Monopsony power is the ability of the buyer to affect the price of the good and pay less than the price that would exist in a petitive market. Chapter 10 Slide 76 Monopsony  Competitive Buyer  Price taker  P = Marginal expenditure = Average expenditure  D = Marginal value Competitive Buyer Compared to Competitive Seller Quantity Quantity $/Q $/Q AR = MR D = MV ME = AE P* Q* ME = MV at Q* ME = P* P* = MV P* Q* MC MR = MC P* = MR P* = MC Buyer Seller Chapter 10 Slide 78 ME S = AE The market supply curve is the monopsonist’s average expenditure curve Monopsonist Buyer Quantity $/Q MV Q*m P*m Monopsony •ME P amp。 above S PC QC Competitive •P = PC •Q = Q+C Chapter 10 Slide 79 Monopoly and Monopsony Quantity AR MR MC $/Q QC PC Monopoly Note: MR = MC。 AR MC。 P MC P* Q* Chapter 10 Slide 80 Monopoly and Monopsony Quantity $/Q MV ME S = AE Q* P* PC QC Monopsony Note: ME = MV。 ME AE。 MV P Chapter 10 Slide 81 Monopoly and Monopsony  Monopoly  MR P  P MC  Qm QC  Pm PC  Monopsony  ME P  P MV  Qm QC  Pm PC Chapter 10 Slide 82 Monopsony Power  A few buyers can influence price (. automobile industry).  Monopsony power gives them the ability to pay a price that is less than marginal value. Chapter 10 Slide 83 Monopsony Power  The degree of monopsony power depends on three similar factors.。