tailieunhanh - Ebook Principles of micro economics (4th edition): Part 2

(BQ) Part 2 book "Principles of micro economics" has contents: Monopoly, oligopoly, and monopolistic competition; games and strategic behavior; games and strategic behavior; the economics of information; labor markets, poverty, and income distribution; the environment, health, and safety; public goods and tax policy. | fra02885_ch09_231-268 17/06/2008 7:23 pm Page 231 pinnacle MHBR:MH-BURR:MHBR034:MHBR034-09: PA RT 3 MARKET IMPERFECTIONS ■ We now abandon Adam Smith’s frictionless world to investigate what happens when people and firms interact in markets plagued by a variety of imperfections. Not surprisingly, the invisible hand that served society so well in the perfectly competitive world often goes astray in this new environment. Our focus in Chapter 9 will be on how markets served by only one or a small number of firms differ from those served by perfectly competitive firms. We will see that although monopolies often escape the pressures that constrain the profits of their perfectly competitive counterparts, the two types of firms have many important similarities. In Chapters 1 to 9 economic decision makers confronted an environment that was essentially fixed. In Chapter 10, however, we will discuss cases in which people expect their actions to alter the behavior of others, as when a firm’s decision to advertise or launch a new product induces a rival to follow suit. Interdependencies of this sort are the rule rather than the exception, and we will explore how to take them into account using simple theories of games. In Chapter 11 we will investigate how the allocation of resources is affected when activities generate costs or benefits that accrue to people not directly involved in those activities. We will see that if parties cannot easily negotiate with one another, the self-serving actions of individuals will not lead to efficient outcomes. Although the invisible hand theory assumes that buyers and sellers are perfectly informed about all relevant options, this assumption is almost never satisfied in practice. In Chapter 12 we will explore how basic economic principles can help imperfectly informed individuals and firms make the best use of the limited information they possess. fra02885_ch09_231-268 17/06/2008 7:23 pm Page 232 pinnacle .