tailieunhanh - Lecture Principles of economics - Chapter 8: Monopoly, oligopoly, and monopolistic competition

This chapter focuses on monopoly and the general characteristics of imperfect competition. This is the first of two chapters on imperfect competition; Chapter 9 continues the discussion using the theory of games as a tool and focuses on monopolistic competition and oligopoly. | Monopoly, Oligopoly, and Monopolistic Competition Chapter 8 McGraw-Hill/Irwin Copyright © 2015 by McGraw-Hill Education (Asia). All rights reserved. 1 Learning Objectives Distinguish among three types of imperfectly competitive industries and describe how imperfect competition differs from perfect competition Identify the five sources of monopoly power and describe why economies of scale are the most enduring of the various sources of market power Apply the concepts of marginal cost and marginal revenue to find the output and price that maximizes a monopolist's profits Explain why the profit-maximizing output level for a monopolist is too small from society's perspective Discuss why firms offer discounts to buyers who are willing to jump a hurdle Discuss public policies that are often applied to natural monopolies 2 Imperfect Competition Imperfectly competitive firms have some ability to set their own price: they are price setters Long-run economic profits possible Reduce economic . | Monopoly, Oligopoly, and Monopolistic Competition Chapter 8 McGraw-Hill/Irwin Copyright © 2015 by McGraw-Hill Education (Asia). All rights reserved. 1 Learning Objectives Distinguish among three types of imperfectly competitive industries and describe how imperfect competition differs from perfect competition Identify the five sources of monopoly power and describe why economies of scale are the most enduring of the various sources of market power Apply the concepts of marginal cost and marginal revenue to find the output and price that maximizes a monopolist's profits Explain why the profit-maximizing output level for a monopolist is too small from society's perspective Discuss why firms offer discounts to buyers who are willing to jump a hurdle Discuss public policies that are often applied to natural monopolies 2 Imperfect Competition Imperfectly competitive firms have some ability to set their own price: they are price setters Long-run economic profits possible Reduce economic surplus Three types: Monopoly has only one seller, no close substitutes Monopolistic competition has many firms producing slightly differentiated products that are reasonably close substitutes Oligopoly has a small number of large firms producing products that are close substitutes 3 Monopolistic Competition Monopolistic Competition Number of Firms Many firms Price Limited flexibility Entry and Exit Free Product Differentiated Economic Profits Zero in long run Decisions P, Q, product differentiation Perfect Competition Many firms Price taker Free Standardized Zero in long run Q only 4 Oligopoly Oligopoly Number of Firms Few firms, each large Price Some flexibility Entry and Exit Difficult Product Differentiated or standardized Economic Profits Possible Decisions P, Q, differentiation, advertising Perfect Competition Many firms Price taker Free Standardized Zero in long run Q only 5 Imperfect Competition Examples of monopoly Electricity and Magic Cards Examples of monopolistic competition