tailieunhanh - Lecture Microeconomics: Chapter 13 - Besanko, Braeutigam

Chapter 13 - Market structure and competition. This chapter presents the following content: Introduction - cola wars, a taxonomy of market structures, monopolistic competition, oligopoly – interdependence of strategic decisions, the effect of a change in the strategic variable, the effect of a change in timing. | 1 Market Structure and Competition Chapter 13 Copyright (c)2014 John Wiley & Sons, Inc. 1 2 Chapter Thirteen Overview Introduction: Cola Wars A Taxonomy of Market Structures Monopolistic Competition Oligopoly – Interdependence of Strategic Decisions Bertrand with Homogeneous and Differentiated Products The Effect of a Change in the Strategic Variable Theory vs. Observation Cournot Equilibrium (homogeneous) Comparison to Bertrand, Monopoly Reconciling Bertrand, and Cournot The Effect of a Change in Timing: Stackelberg Equilibrium Chapter Thirteen Copyright (c)2014 John Wiley & Sons, Inc. 3 Chapter Thirteen Market Structures • The number of sellers • The number of buyers • Entry conditions • The degree of product differentiation Four Key Dimensions Copyright (c)2014 John Wiley & Sons, Inc. 4 Chapter Thirteen Product Differentiation Definition: Product Differentiation between two or more products exists when the products possess attributes that, in the minds of consumers, set the . | 1 Market Structure and Competition Chapter 13 Copyright (c)2014 John Wiley & Sons, Inc. 1 2 Chapter Thirteen Overview Introduction: Cola Wars A Taxonomy of Market Structures Monopolistic Competition Oligopoly – Interdependence of Strategic Decisions Bertrand with Homogeneous and Differentiated Products The Effect of a Change in the Strategic Variable Theory vs. Observation Cournot Equilibrium (homogeneous) Comparison to Bertrand, Monopoly Reconciling Bertrand, and Cournot The Effect of a Change in Timing: Stackelberg Equilibrium Chapter Thirteen Copyright (c)2014 John Wiley & Sons, Inc. 3 Chapter Thirteen Market Structures • The number of sellers • The number of buyers • Entry conditions • The degree of product differentiation Four Key Dimensions Copyright (c)2014 John Wiley & Sons, Inc. 4 Chapter Thirteen Product Differentiation Definition: Product Differentiation between two or more products exists when the products possess attributes that, in the minds of consumers, set the products apart from one another and make them less than perfect substitutes. Examples: Pepsi is sweeter than Coke, Brand Name batteries last longer than "generic" batteries. Copyright (c)2014 John Wiley & Sons, Inc. 5 Chapter Thirteen Product Differentiation "Superiority" (Vertical Product Differentiation) . one product is viewed as unambiguously better than another so that, at the same price, all consumers would buy the better product "Substitutability" (Horizontal Product Differentiation) . at the same price, some consumers would prefer the characteristics of product A while other consumers would prefer the characteristics of product B. Copyright (c)2014 John Wiley & Sons, Inc. 6 Chapter Thirteen Types of Market Structures Copyright (c)2014 John Wiley & Sons, Inc. 7 Chapter Thirteen Oligopoly Assumptions: Many Buyers and Few Sellers Each firm faces downward-sloping demand because each is a large producer compared to the total market size There is no one dominant model of oligopoly. We