平狄克微观经济学marketpower∶monopolyandmonopsony(编辑修改稿)

平狄克微观经济学marketpower∶monopolyandmonopsony(编辑修改稿)内容摘要：

020 Pearson Education, Inc. Chapter 10 46 Measuring Monopoly Power  Our firm would have more monopoly power, of course, if it could get rid of the other firms But the firm‟s monopoly power might still be substantial  How can we measure monopoly power to pare firms?  What are the sources of monopoly power? Why do some firms have more than others? 169。 2020 Pearson Education, Inc. Chapter 10 47 Measuring Monopoly Power  Could measure monopoly power by the extent to which price is greater than MC for each firm  Lerner‟s Index of Monopoly Power L = (P MC)/P The larger the value of L (between 0 and 1) the greater the monopoly power L is expressed in terms of Ed L = (P MC)/P = 1/Ed Ed is elasticity of demand for a firm, not the market 169。 2020 Pearson Education, Inc. Chapter 10 48 Monopoly Power Monopoly power, however, does not guarantee profits Profit depends on average cost relative to price One firm may have more monopoly power but lower profits due to high average costs 169。 2020 Pearson Education, Inc. Chapter 10 49 Rule of Thumb for Pricing Pricing for any firm with monopoly power: If Ed is large, markup is small If Ed is small, markup is large  dEMCP11 Elasticity of Demand and Price Markup P* MR D $/Q Quantity MC Q* P*MC The more elastic is demand, the less the markup. D MR $/Q Quantity MC Q* P* P*MC 169。 2020 Pearson Education, Inc. Chapter 10 51 Markup Pricing: Supermarkets amp。 Convenience Stores Supermarkets  M C . a b o v e 11%10 about s e t P r ic e s s t o r e s in d i v id u a l f o r 3.p r o d u c t S im i la r 2.f ir m s S e v e r a l 1..5)(.410MCMCMCPEd169。 2020 Pearson Education, Inc. Chapter 10 52 Markup Pricing: Supermarkets amp。 Convenience Stores Convenience Stores  1 . H i g h e r p r i ces t h a n su p e r m a r k e ts2 . C o n v e n i e n ce d i ff e r e n tiat e s th e m3 . 54 . 1 .2 5 ( )1 1 5 0 .85 . P r i ces se t a b o u t 2 5 % a b o v e M C .dEM C M CP M C  169。 2020 Pearson Education, Inc. Chapter 10 53 Markup Pricing: Supermarkets amp。 Convenience Stores Convenience stores have more monopoly power Convenience stores do have higher profits than supermarkets, however Volume is far smaller and average fixed costs are larger 169。 2020 Pearson Education, Inc. Chapter 10 54 Sources of Monopoly Power Why do some firms have considerable monopoly power, and others have little or none? Monopoly power is determined by ability to set price higher than marginal cost A firm‟s monopoly power, therefore, is determined by the firm‟s elasticity of demand 169。 2020 Pearson Education, Inc. Chapter 10 55 Sources of Monopoly Power The less elastic the demand curve, the more monopoly power a firm has The firm‟s elasticity of demand is determined by: 1) Elasticity of market demand 2) Number of firms in market 3) The interaction among firms 169。 2020 Pearson Education, Inc. Chapter 10 56 Elasticity of Market Demand With one firm, their demand curve is market demand curve Degree of monopoly power is determined pletely by elasticity of market demand With more firms, individual demand may differ from market demand Demand for a firm‟s product is more elastic than the market elasticity 169。 2020 Pearson Education, Inc. Chapter 10 57 Number of Firms The monopoly power of a firm falls as the number of firms increases。 all else equal More important are the number of firms with significant market share Market is highly concentrated if only a few firms account for most of the sales Firms would like to create barriers to entry to keep new firms out of market Patent, copyrights, licenses, economies of scale 169。 2020 Pearson Education, Inc. Chapter 10 58 Interaction Among Firms If firms are aggressive in gaining market share by, for example, undercutting the other firms, prices may reach close to petitive levels If firms collude (violation of antitrust rules), could generate substantial monopoly power Markets are dynamic and therefore, so is the concept of monopoly power 169。 2020 Pearson Education, Inc. Chapter 10 59 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? We can pare producer and consumer surplus when in a petitive market and in a monopolistic market 169。 2020 Pearson Education, Inc. Chapter 10 60 The Social Costs of Monopoly  Perfectly petitive firm will produce where MC = D  PC and QC  Monopoly produces where MR = MC, getting their price from the demand curve  PM and QM  There is a loss in consumer surplus when going from perfect petition to monopoly  A deadweight loss is also created with monopoly 169。 2020 Pearson Education, Inc. Chapter 10 61 B A Lost Consumer Surplus Because of the higher price, consumers lose A+B and producer gains AC. C Deadweight Loss from Monopoly Power Quantity AR=D MR MC QC PC Pm Qm $/Q Deadweight Loss 169。 2020 Pearson Education, Inc. Chapter 10 62 The Social Costs of Monopoly Social cost of monopoly is likely to exceed the deadweight loss Rent Seeking Firms may spend to gain monopoly power  Lobbying  Advertising  Building excess capacity 169。 2020 Pearson Education, Inc. Chapter 10 63 The Social Costs of Monopoly 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 169。 2020 Pearson Education, Inc. Chapter 10 64 The Social Costs of Monopoly Example In 1996, Archer Daniels Midland (ADM) successfully lobbied for reg。