Monopsony(微观经济学-华侨大学,JeffCaldwell)

Chapter10MarketPower:MonopolyandMonopsonyChapter10Slide2TopicstobeDiscussedMonopolyMonopolyPowerSourcesofMonopolyPowerTheSocialCostsofMonopolyPowerChapter10Slide3TopicstobeDiscussedMonopsonyMonopsonyPowerLimitingMarketPower:TheAntitrustLawsChapter10Slide4PerfectCompetitionReviewofPerfectCompetitionP=LMC=LRACNormalprofitsorzeroeconomicprofitsinthelongrunLargenumberofbuyersandsellersHomogenousproductPerfectinformationFirmisapricetakerPerfectCompetitionQQPPMarketIndividualFirmDSQ0P0P0D=MR=Pq0LRACLMCChapter10Slide6MonopolyMonopoly1)Oneseller-manybuyers2)Oneproduct(nogoodsubstitutes)3)BarrierstoentryChapter10Slide7MonopolyThemonopolististhesupply-sideofthemarketandhascompletecontrolovertheamountofferedforsale.Profitswillbemaximizedatthelevelofoutputwheremarginalrevenueequalsmarginalcost.Chapter10Slide8MonopolyFindingMarginalRevenueAsthesoleproducer,themonopolistworkswiththemarketdemandtodetermineoutputandprice.Assumeafirmwithdemand:P=6-QChapter10Slide9Total,Marginal,andAverageRevenue$60$0------515$5$54283433913248-12155-31TotalMarginalAveragePriceQuantityRevenueRevenueRevenuePQRMRARChapter10Slide10AverageandMarginalRevenueOutput0123$perunitofoutput12345674567AverageRevenue(Demand)MarginalRevenueChapter10Slide11MonopolyObservations1)Toincreasesalesthepricemustfall2)MRP3)ComparedtoperfectcompetitionNochangeinpricetochangesalesMR=PChapter10Slide12MonopolyMonopolist’sOutputDecision1)ProfitsmaximizedattheoutputlevelwhereMR=MC2)CostfunctionsarethesameMRMCorMRMCQCQRQQCQRQ0///)()()(Chapter10Slide13MaximizingProfitWhenMarginalRevenueEqualsMarginalCostAtoutputlevelsbelowMR=MCthedecreaseinrevenueisgreaterthanthedecreaseincost(MRMC).AtoutputlevelsaboveMR=MCtheincreaseincostisgreaterthanthedecreaseinrevenue(MRMC)TheMonopolist’sOutputDecisionChapter10Slide14LostprofitP1Q1LostprofitMCACQuantity$perunitofoutputD=ARMRP*Q*MaximizingProfitWhenMarginalRevenueEqualsMarginalCostP2Q2Chapter10Slide15MonopolyAnExampleQQCMCQQCCost250)(2TheMonopolist’sOutputDecisionChapter10Slide16MonopolyAnExampleQQRMRQQQQPQRQQPDemand24040)()(40)(2TheMonopolist’sOutputDecisionChapter10Slide17MonopolyAnExample3010,When102240PQQQQorMCMRTheMonopolist’sOutputDecisionChapter10Slide18MonopolyAnExampleBysettingmarginalrevenueequaltomarginalcost,itcanbeverifiedthatprofitismaximizedatP=$30andQ=10.Thiscanbeseengraphically:TheMonopolist’sOutputDecisionChapter10Slide19Quantity$0510152010015020030040050RProfitstt'cc’ExampleofProfitMaximizationCChapter10Slide20ExampleofProfitMaximizationObservationsSlopeofrr’=slopecc’andtheyareparallelat10unitsProfitsaremaximizedat10unitsP=$30,Q=10,TR=PxQ=$300AC=$15,Q=10,TC=ACxQ=150Profit=TR-TC$150=$300-$150Quantity$0510152010015020030040050RCProfitstt'ccChapter10Slide21ProfitARMRMCACExampleofProfitMaximizationQuantity$/Q051015201020304015Chapter10Slide22ExampleofProfitMaximizationObservationsAC=$15,Q=10,TC=ACxQ=150Profit=TR=TC=$300-$150=$150orProfit=(P-AC)xQ=($30-$15)(10)=$150Quantity$/Q051015201020304015MCARMRACProfitChapter10Slide23MonopolyARuleofThumbforPricingWewanttotranslatetheconditionthatmarginalrevenueshouldequalmarginalcostintoaruleofthumbthatcanbemoreeasilyappliedinpractice.Thiscanbedemonstratedusingthefollowingsteps:Chapter10Slide24ARuleofThumbforPricingPQQPEQPPQPPQPQPMRQPQQRMRd.3.2)(.1Chapter10Slide25ARuleofThumbforPricingddEPPMREQPPQ1.51.4Chapter10Slide26ARuleofThumbforPricingDDDE11MCPEE1PPMCMR@maximizedis1.6Chapter10Slide27=themarkupoverMCasapercentageofprice(P-MC)/PdE1.7ARuleofThumbforPricing8.Themarkupshouldequaltheinverseoftheelasticityofdemand.Chapter10Slide28ARuleofThumbforPricing12$75.9411994119.PMCEAssumeEMCPddChapter10Slide29MonopolyMonopolypricingcomparedtoperfectcompetitionpricing:MonopolyPMCPerfectCompetitionP=MCChapter10Slide30MonopolyMonopolypricingcomparedtoperfectcompetitionpricing:Themoreelasticthedemandthecloserpriceistomarginalcost.IfEdisalargenegativenumber,priceisclosetomarginalcostandviceversa.Chapter10Slide31Astra-MerckPricesPrilosec1995PriceofPrilosec=$3.50/dailydosePriceofTagametandZantac=$1.50-$2.25/dailydoseMCofProlosec=30-40cents/dailydoseTheMonopolist’sOutputDecisionChapter10Slide32Astra-MerckPricesPrilosecTheMonopolist’sOutputDecision89.3$09.35.91.11.11135.11MCEMCPD•Priceof$3.50isconsistentwith“theruleofthumbpricing”Chapter10Slide33MonopolyShiftsinDemandInperfectcompetition,themarketsupplycurveisdeterminedbymarginalcost.Foramonopoly,outputisdeterminedbymarginalcostandtheshapeofthedemandcurve.Chapter10Slide34D2MR2D1MR1ShiftinDemandLeadstoChangeinPricebutSameOutputQuantityMC$/QP2P1Q1=Q2Chapter10Slide35D1MR1ShiftinDemandLeadstoChangeinOutputbutSamePriceMC$/QMR2D2P1=P2Q1Q2QuantityChapter10Slide36MonopolyObservationsShiftsindemandusuallycauseachangeinbothpriceandquantity.Amonopolisticmarkethasnosupplycurve.Chapter10Slide37MonopolyObservationsMonopolistmaysupplymanydifferen