清华大学中级微观经济学讲义(清华 李稻葵)23

’supplycurve.Short-RunSupplyInashort-runthenumberoffirmsintheindustryis,temporarily,fixed.LetSi(p)befirmi’ssupplyfunction.Theindustry’sshort-runsupplyfunctionisSpSpiin()().1SupplyFromACompetitiveIndustrypS1(p)pS2(p)pS(p)=S1(p)+S2(p)p”p”S1(p”)S1(p”)+S2(p”)S2(p”)Firm1’sSupplyFirm2’sSupplyIndustry’sSupplyShort-RunIndustryEquilibriumInashort-run,neitherentrynorexitcanoccur.Consequently,afirm’sprofitcanbepositive,zero,ornegative.Short-RunIndustryEquilibriumMarketdemandShort-runindustrysupplypseYseYShort-runequilibriumpriceclearsthemarketandistakenasgivenbyeachfirm.Short-RunIndustryEquilibriumy1y2y3ACsACsACsMCsMCsMCsy1*y2*y3*pseFirm1Firm2Firm3Short-RunIndustryEquilibriumy1y2y3ACsACsACsMCsMCsMCsy1*y2*y3*pseFirm1Firm2Firm3Firm1wishestoremainintheindustry.Firm2wishestoexitfromtheindustry.Firm3isindifferent.P10P20P3=0Long-RunIndustrySupplyInthelong-runentryandexistarepossible.Positiveeconomicprofitinducesentry.Entryincreasesindustrysupply,causingpsetofall.Whendoesentrycease?Long-RunIndustrySupplyS2(p)Mkt.DemandAC(y)MC(y)yA“Typical”FirmTheMarketppYSupposetheindustryinitiallycontainsonlytwofirms.Mkt.SupplyLong-RunIndustrySupplyS2(p)Mkt.DemandAC(y)MC(y)yA“Typical”FirmTheMarketppYp2p2y2*Thenthemarket-clearingpriceisp2.Eachfirmproducesy2*unitsofoutput.Long-RunIndustrySupplyS2(p)Mkt.DemandAC(y)MC(y)yA“Typical”FirmTheMarketppYp2p2y2*P0Eachfirmmakesapositiveeconomicprofit,inducingentrybyanotherfirm.Long-RunIndustrySupplyS2(p)S3(p)Mkt.DemandAC(y)MC(y)yA“Typical”FirmTheMarketppYp2p2Marketsupplyshiftsoutwards.Marketpricefalls.y2*Long-RunIndustrySupplyS2(p)S3(p)Mkt.DemandAC(y)MC(y)yA“Typical”FirmTheMarketppYp3Eachfirmproducesless.y3*p3Long-RunIndustrySupplyS2(p)S3(p)Mkt.DemandAC(y)MC(y)yA“Typical”FirmTheMarketppYp3Eachfirmproducesless.Eachfirm’seconomicprofitisreduced.y3*p3P0Long-RunIndustrySupplyS3(p)Mkt.DemandAC(y)MC(y)yA“Typical”FirmTheMarketppYp3Eachfirm’seconomicprofitispositive.Willanotherfirmenter?y3*p3P0Long-RunIndustrySupplyS4(p)S3(p)Mkt.DemandAC(y)MC(y)yA“Typical”FirmTheMarketppYp3Marketsupplywouldshiftoutwardsagain.y3*p3Long-RunIndustrySupplyS4(p)S3(p)Mkt.DemandAC(y)MC(y)yA“Typical”FirmTheMarketppYp3Marketsupplywouldshiftoutwardsagain.Marketpricewouldfallagain.y3*p3Long-RunIndustrySupplyS4(p)S3(p)Mkt.DemandAC(y)MC(y)yA“Typical”FirmTheMarketppYp4Eachfirmwouldproducelessagain.Eachfirm’seconomicprofitwouldbenegative.Sothefourthfirmwouldnotenter.y4*P0p4Whatisthelong-runnumberoffirmsintheindustry?ItisthelargestnumberforwhichthemarketpriceisatleastaslargeasminimumofAC(y).Long-RunIndustrySupplySupposethatmarketdemandislargeenoughtosustainonlytwofirmsintheindustry.Long-RunIndustrySupplyS2(p)S3(p)Mkt.DemandAC(y)MC(y)yA“Typical”FirmTheMarketppYp2’y2*p2’Long-RunIndustrySupplyThenmarketdemandincreases,themarketpricerises,eachfirmproducesmore,andearnsahighereconomicprofit.Long-RunIndustrySupplyS2(p)S3(p)Mkt.DemandAC(y)MC(y)yA“Typical”FirmTheMarketppYp2’y2*p2’Long-RunIndustrySupplyS2(p)S3(p)Mkt.DemandAC(y)MC(y)yA“Typical”FirmTheMarketppYp2”y2*p2”Long-RunIndustrySupplyS2(p)S3(p)Mkt.DemandAC(y)MC(y)yA“Typical”FirmTheMarketppYy2*p2”p2”Long-RunIndustrySupplyS2(p)S3(p)Mkt.DemandAC(y)MC(y)yA“Typical”FirmTheMarketppYy2*Noticethata3rdfirmwillnotentersinceitwouldearnnegativeeconomicprofits.p2”p2”Whatisthemarketdemandcurveincreasesfurther?Pricewillincreasefurther;Thetwoincumbentfirmswillmakemoreprofit;Athirdfirmmayenterandtotalsupplywillincrease.Inthatcase,thepricewilldrop.Long-RunIndustrySupplyS2(p)S3(p)Mkt.DemandAC(y)MC(y)yA“Typical”FirmTheMarketppYy2*p2’”p2’”Long-RunIndustrySupplyS2(p)S3(p)Mkt.DemandAC(y)MC(y)yA“Typical”FirmTheMarketppYy2*Athirdfirmcannowenter,causingallfirmstoearnzeroeconomicprofits.p2’”p2’”Thelong-termsupplycurveintheintervalofn=2S2(p)S3(p)Mkt.DemandAC(y)MC(y)yA“Typical”FirmTheMarketppYy2*Theonlyrelevantpartoftheshort-runsupplycurveforn=2firmsintheindustry.p2’”p2’”Whenwilla4thfirmenter?Mkt.DemandAC(y)MC(y)yA“Typical”FirmTheMarketppYp3’y3*A4thfirmwouldnowearnnegativeeconomicprofitsifitenteredtheindustry.p3’S3(p)S4(p)Whenwilla4thfirmenter?S3(p)Mkt.DemandAC(y)MC(y)yA“Typical”FirmTheMarketppYy3*S4(p)Butnowa4thfirmwouldearnzeroeconomicprofitifitenteredtheindustry.p3’p3’Long-termsupplycurveintheinternalofn=3S3(p)Mkt.DemandAC(y)MC(y)yA“Typical”FirmTheMarketppYy3*S4(p)p3’p3’Theonlyrelevantpartoftheshort-runsupplycurveforn=3firmsintheindustry.Finally,theLong-RunIndustrySupplyCurveAC(y)MC(y)yA“Typical”FirmTheMarketLong-RunSupplyCurveppYy3*Long-RunIndustrySupplyAC(y)MC(y)yA“Typical”FirmTheMarketLong-RunSupplyCurveppYy3*NoticethatthebottomofeachsegmentofthesupplycurveisminAC(y).Long-RunIndustrySupply–wheneachfirmissmallerandsmallerAC(y)MC(y)yA“Typical”FirmTheMarketLong-RunSupplyCurveppYy*ThebottomofeachsegmentofthesupplycurveisminAC(y).Asfirmsget“smaller”thesegmentsgetshorter.Long-RunIndustrySupply–wheneachfirmisinfinitelysmallAC(y)MC(y)yA“Typical”FirmTheMarketLong-