AP微观经济学4

8.MonopolyMonopolyAmonopolyischaracterizedby:asinglesellerofawell-definedproductforwhichtherearenogoodsubstituteshighbarrierstotheentryofotherfirmsintothemarketfortheproductTypesofbarriersLegalbarrierstoentrycreatelegalmonopoly.Alegalmonopolyisamarketinwhichcompetitionandentryarerestrictedbythegrantingofapublicfranchise,governmentlicense,patentorcopyright.Example:radioandtelevisionstationNaturalbarrierstoentrycreatenaturalmonopoly,whichisanindustryinwhichonefirmcansupplytheentiremarketatalowerpricethantwoormorefirmscan.(Economiesofscale)Example:electricutilityCharacteristicsNumbersofsellers:onesellerAvailabilityofsubstitutes:noDegreeofelasticity:generallyinelasticPricingpolicy:price-makerBarrierstoentry/exit:highEconomicprofits:yesPMC,PMRFirmandmarketPQATCMCQ*P*1.MR=MC2.FindthepointonD3.DecideP*andQ*ProfitDMRDead-weightlossPQACandMCQmPmDWL:resourcescouldhavebeenutilizedtoproducegoodsandareinsteadtotallywasted.ProfitDMRConsumersurplusDWLPerfectCompetitionMonopolyPriceLowerHigherOutputHigherLowerPcQcPriceDiscrimination:before80PriceQuantityDemandATC70100Profit=$2400Pricediscriminationisthepracticeofchargingdifferentconsumersdifferentpricesforthesameproductorservice.PriceQuantityDemandATC7050110$200090110190$1200Profit=$3200PriceDiscrimination:afterConditions:1.Consumershavedifferentpriceelasticity;2.Higherpriceforlowerelasticityconsumers;3.NochancefortheresaleoftheproductPriceDiscriminationForpricediscriminationtoworkthesellermust:Downwardslopingdemandcurve(pricesearcher)AtleasttwoidentifiablegroupsofcustomerswithdifferentpriceelasticitiesofdemandfortheproductPreventthecustomerspayingthelowerpricefromresellingtheproducttothecustomerspayingthehigherprice(noarbitrage)Pricediscriminationreducesthisinefficiencybyincreasingoutputtowardthequantitywheremarginalbenefitequalsmarginalcost,andthedeadweightlossissmaller.ExtremeCase:Ifitwerepossibleforthemonopolisttochargeeachconsumerthemaximumtheyarewillingtopayforeachunit,wherewouldbenodeadweightloss,sinceamonopolistwouldproducethesamequantityasunderperfectcompetition.Withperfectpricediscriminationtheconsumersurpluswouldallbecapturedbythemonopolist.NaturalMonopolyWhentheaveragecostofproductionforasinglefirmisfallingthroughouttherelevantrangeofconsumerdemand,wesaythattheindustryisanaturalmonopoly.Largeeconomiesofscaleinanindustrypresentsignificantbarrierstoentry.GovernmentRegulationRegulatorsoftenattempttoincreasecompetitionandefficiencythrougheffortstoreduceartificialbarrierstotrade,suchaslicensingrequirement,quotas,andtariffs.GovernmentregulationAveragecostpricingisthemorecommonformofregulationatthepointwhereATC=D.Thiswill:Increaseoutputanddecreaseprice.Increasesocialwelfare(allocativeefficiency).Ensurethemonopolistanormalprofit(butnoeconomicprofit)sinceprice=ATC.Marginalcostpricingwhichisalsoreferredtousefficientregulation,forcesthemonopolisttoreducepricetothepointwhereMC=D.thiswill:Increaseoutputandreduceprice.CausesthemonopolisttoincuralosssincepriceisbelowATC.Suchasolutionrequiresagovernmentsubsidyinordertoprovidethefirmwithanormalprofit.Anotherwayof“regulating”amonopolyisforthegovernmenttosellthemonopolyrighttothehighestbidder.LossCUnregulatedandregulatedmonopolyPQATCMCQAPAProfitAMRDPBPCQBQCUnregulatedandregulatedmonopolyTypePriceQuantityCommentNaturalmonopolyCertainindustriescouldbestoperateasmonopoliessincecompetitionwouldpreventthebenefitsofeconomiesofscale.UnregulatedmonopolyPAQAEcoprofit0ProfitismaximizedRegulated:priceatfairrateofreturnPBQBP=ATC=DEcoprofit=0MoreefficientRegulated:priceatsociallyoptimalpricePCQCP=MC=DSubsidyneededtocutlossMostefficientInefficiencyofmonopolyHigherpriceandloweroutputMaximizeprofitsDead-weightlossInefficiencytothesocietyConcentrationMeasuresConcentrationmeasuresLernerIndex:(P-MC)/P.Thegreatertheindex,thegreaterthemarketpowerTheHerfindahl-HirschmanIndex(HHI):thesumofthesquaresofthemarketsharesofthelargestfirmsinthemarket.limitation:bothofoursimpleconcentrationmeasuresisthatbarrierstoentryarenotconsideredineithercase.Evenafirmwithhighmarketsharemaynothavemuchpricingpowerifbarrierstoentryarelowandthereispotentialcompetition.1000180010000competitivemoderatelycompetitiveNotcompetitivemonopoly9.Monopolisticcompetition15CharacteristicsNumbersofsellers:oligopoly/monopoly,perfectcompetitionAvailabilityofsubstitutes:imperfectsubstitutionsDegreeofelasticity:imperfectelasticitySimilarityofproducts:heterogeneousPricingpolicy:mostlynon-pricecompetitionBarrierstoentry/exit:weakEconomicprofits:zerointhelongrunP=AC,PminATC,PMC,PMRThemostcommonmarketstructureintheUSWaystocompeteSincesubstitutesarefullyavailableandaweakentrybarrier,amonopolisticfirmmustdistinguishitsproductsfromhisrivalsthroughnon-pricecompetition:1.Brandname,storename,shoppers’card,rewardsforfrequentcustomers,etc.2.Ongoinginnovation3.Advertising4.NewdesigningProfitsShortrunprofitsPQQ*P*ATCMCDMR1.MR=MC2.FindthepointonD3.DecideP*andQ*LossesShortrunlossesPQQ*P*ATCMCDMR1.MR=MC2.FindthepointonD3.DecideP*andQ*LongrunequilibriumP