第10章市场势力市场势力市场势力市场势力: :垄断与买方垄断垄断与买方垄断垄断与买方垄断垄断与买方垄断1第第 10章章本章要讨论的问题本章要讨论的问题垄断垄断势力垄断形成原因垄断的社会成本2第第 10章章本章要讨论的问题本章要讨论的问题买方垄断买方垄断势力限制市场势力: 反垄断法3第第 10章章完全竞争完全竞争完全竞争回顾lP = LMC = LRACl长期内只存在正常利润或经济利润为零l大量生产者和消费者l同质化产品l充分信息l企业是价格的接受者4第第 10章章完全竞争完全竞争QQPP市场市场单个企业单个企业DSQ0P0P0D = MR = Pq0LRACLMC5第第 10章章完全垄断完全垄断完全垄断1) 一个生产者 许多消费者2) 一种产品 (没有替代品)3) 市场进入壁垒6第第 10章章完全垄断完全垄断完全垄断企业是市场供给方，对其产品的销售能够绝对控制。当边际收入等于边际成本时，利润达到最大。7第第 10章章完全垄断完全垄断确定边际收入l作为唯一的生产者, 垄断企业面对整个市场l假定企业的需求为:uP = 6 - Q8第第 10章章总收入、边际收入及平均收入总收入、边际收入及平均收入$60$0-515$5$54283433913248-12155-31价格价格 数量数量 总收入总收入 边际收入边际收入 平均收入平均收入PQTRMRAR9第第 10章章平均收入和边际收入平均收入和边际收入Q0123P12345674567平均收入平均收入 (需求需求)边际收入边际收入10第第 10章章完全垄断完全垄断观察1) 只有降价才能增加销售量2) MR MC).当产量高于 MR = MC 时，收入的增加小于成本的增加(MR MCl完全竞争P = MC21第第 10章章完全垄断完全垄断完全垄断与完全竞争的价格比较:l需求价格弹性越大，价格越接近于边际成本22第第 10章章完全垄断完全垄断需求变化l在完全竞争市场中, 市场供给曲线由边际成本决定；l对于完全垄断企业, 产量由边际成本和需求曲线共同决定；23第第 10章章D2MR2D1MR1需求变动导致价格变动但产量不变需求变动导致价格变动但产量不变QMCPP2P1Q1= Q224第第 10章章D1MR1需求变动导致产量变动但价格不变需求变动导致产量变动但价格不变MCPMR2D2P1 = P2Q1Q2Q25第第 10章章完全垄断完全垄断观察l需求变化通常导致价格及需求量都发生变化；l完全垄断市场没有供给曲线；26第第 10章章完全垄断完全垄断观察l在相同价格水平下，完全垄断企业可能生产不同数量的产品；l在不同价格水平下，完全垄断企业可能生产相同数量的产品；27第第 10章章MonopolyThe Effect of a TaxlUnder monopoly price can sometimes rise by more than the amount of the tax.To determine the impact of a tax:lt = specific taxlMC = MC + tlMR = MC + t : optimal production decision28第第 10章章Effect of Excise Tax on MonopolistQuantity$/QMCD = ARMRQ0P0MC + taxtQ1P1Increase in P: P0P1 increase in tax29第第 10章章QuestionlSuppose: Ed = -2lHow much would the price change?Effect of Excise Tax on Monopolist30第第 10章章AnswerWhat would happen to profits?Effect of Excise Tax on Monopolist31第第 10章章MonopolyThe Multiplant FirmlFor many firms, production takes place in two or more different plants whose operating cost can differ.32第第 10章章MonopolyThe Multiplant FirmlChoosing total output and the output for each plant:uThe marginal cost in each plant should be equal.uThe marginal cost should equal the marginal revenue for each plant.33第第 10章章MonopolyAlgebraically:The Multiplant Firm34第第 10章章MonopolyAlgebraically:The Multiplant Firm35第第 10章章MonopolyAlgebraically:The Multiplant Firm36第第 10章章MonopolyAlgebraically:37第第 10章章Production with Two PlantsQuantity$/QD = ARMRMC1MC2MCTMR*Q1Q2Q3P*38第第 10章章Production with Two PlantsObservations:1)MCT = MC1 + MC22)Profit maximizing output:uMCT = MR at QT and P *uMR = MR*uMR* = MC1 at Q1, MC* = MC2 at Q2uMC1 + MC2 = MCT, Q1 + Q2 = QT, and MR = MC1 + MC2 Quantity$/QD = ARMRMC1MC2MCTMR*Q1Q2Q3P*39第第 10章章Monopoly PowerMonopoly is rare.However, a market with several firms, each facing a downward sloping demand curve will produce so that price exceeds marginal cost.40第第 10章章Monopoly PowerScenario:lFour firms with equal share (5,000) of a market for 20,000 toothbrushes at a price of $1.50.41第第 10章章Quantity10,0002.00QA$/Q$/Q1.501.0020,00030,0003,0005,0007,0002.001.501.001.401.60At a market priceof $1.50, elasticity ofdemand is -1.5.Market DemandThe Demand for ToothbrushesThe demand curve for Firm Adepends on how muchtheir product differs, andhow the firms compete.42第第 10章章At a market priceof $1.50, elasticity ofdemand is -1.5.Quantity10,0002.00QA$/Q$/Q1.501.0020,00030,0003,0005,0007,0002.001.501.001.401.60DAMRAMarket DemandFirm A sees a much more elastic demand curve due tocompetition-Ed = -.6. StillFirm A has some monopoly power and charges a pricewhich exceeds MC.MCAThe Demand for Toothbrushes43第第 10章章Monopoly PowerMeasuring Monopoly PowerlIn perfect competition: P = MR = MClMonopoly power: P MC44第第 10章章Monopoly PowerLerners Index of Monopoly PowerlL = (P - MC)/PuThe larger the value of L (between 0 and 1) the greater the monopoly power.lL is expressed in terms of EduL = (P - MC)/P = -1/EduEd is elasticity of demand for a firm, not the market45第第 10章章Monopoly PowerMonopoly power does not guarantee profits.Profit depends on average cost relative to price.Question:lCan you identify any difficulties in using the Lerner Index (L) for public policy?46第第 10章章Monopoly PowerThe Rule of Thumb for PricinglPricing for any firm with monopoly power uIf Ed is large, markup is smalluIf Ed is small, markup is large47第第 10章章Elasticity of Demand and Price Markup$/Q$/QQuantityQuantityARMRMRARMCMCQ*Q*P*P*P*-MCThe more elastic isdemand, the less themarkup.48第第 10章章Markup Pricing:Supermarkets to Designer JeansSupermarkets49第第 10章章Convenience StoresMarkup Pricing:Supermarkets to Designer Jeans50第第 10章章Convenience stores have more monopoly power.Question:lDo convenience stores have higher profits than supermarkets?Markup Pricing:Supermarkets to Designer JeansConvenience Stores51第第 10章章lDesigner jeansEd = -3 to -4uPrice 33 - 50% MCuMC = $12 - $18/pairuWholesale price = $18 - $27Markup Pricing:Supermarkets to Designer JeansDesigner Jeans52第第 10章章The Pricing ofPrerecorded Videocassettes19851999TitleRetail Price($)TitleRetail Price($)Purple Rain$29.98Austin Powers$10.49Raiders of the Lost Ark24.95A Bugs Life17.99Jane Fonda Workout59.95Theres Something about Mary13.99The Empire Strikes Back79.98Tae-Bo Workout24.47An Officer and a Gentleman24.95Lethal Weapon 416.99Star Trek: The Motion Picture 24.95Men in Black12.99Star Wars39.98Armageddon15.8653第第 10章章What Do You Think?lShould producers lower the price of videocassettes to increase sales and revenue?The Pricing ofPrerecorded Videocassettes54第第 10章章Sources of Monopoly PowerWhy do some firms have considerable monopoly power, and others have little or none?A firms monopoly power is determined by the firms elasticity of demand.55第第 10章章Sources of Monopoly PowerThe firms elasticity of demand is determined by:1) Elasticity of market demand2) Number of firms3) The interaction among firms56第第 10章章The Social Costs of Monopoly PowerMonopoly power results in higher prices and lower quantities.However, does monopoly power make consumers and producers in the aggregate better or worse off?57第第 10章章BALost Consumer SurplusDeadweight LossBecause of the higherprice, consumers loseA+B and producer gains A-C.CDeadweight Loss from Monopoly PowerQuantityARMRMCQCPCPmQm$/Q58第第 10章章Rent SeekinglFirms may spend to gain monopoly poweruLobbyinguAdvertisinguBuilding excess capacityThe Social Costs of Monopoly Power59第第 10章章The incentive to engage in monopoly practices is determined by the profit to be gained.The larger the transfer from consumers to the firm, the larger the social cost of monopoly.The Social Costs of Monopoly Power60第第 10章章Examplel1996 Archer Daniels Midland (ADM) successfully lobbied for regulations requiring ethanol be produced from cornQuestionlWhy only corn?The Social Costs of Monopoly Power61第第 10章章Price RegulationlRecall that in competitive markets, price regulation created a deadweight loss.Question:lWhat about a monopoly?The Social Costs of Monopoly Power62第第 10章章ARMRMCPmQmACP1Q1Marginal revenue curvewhen price is regulatedto be no higher that P1.If left alone, a monopolistproduces Qm and charges Pm.If price is lowered to P3 outputdecreases and a shortage exists. For output levels above Q1 ,the original average andmarginal revenue curves apply.If price is lowered to PC outputincreases to its maximum QC andthere is no deadweight loss.Price Regulation$/QQuantityP2 = PCQcP3Q3Q3Any price below P4 resultsin the firm incurring a loss. P463第第 10章章Natural MonopolylA firm that can produce the entire output of an industry at a cost lower than what it would be if there were several firms.The Social Costs of Monopoly Power64第第 10章章Regulating the Priceof a Natural Monopoly$/QNatural monopolies occurbecause of extensive economies of scaleQuantity65第第 10章章MCACARMR$/QQuantitySetting the price at Pr yields the largest possibleoutput;excess profit is zero.QrPrPCQCIf the price were regulate to be PC,the firm would lose moneyand go out of business.PmQmUnregulated, the monopolistwould produce Qm and charge Pm.Regulating the Priceof a Natural Monopoly66第第 10章章Regulation in PracticelIt is very difficult to estimate the firms cost and demand functions because they change with evolving market conditionsThe Social Costs of Monopoly Power67第第 10章章Regulation in PracticelAn alternative pricing technique-rate-of-return regulation allows the firms to set a maximum price based on the expected rate or return that the firm will earn.uP = AVC + (D + T + sK)/Q, wherelP = price, AVC = average variable costlD = depreciation, T = taxesls = allowed rate of return, K = firms capital stockThe Social Costs of Monopoly Power68第第 10章章Regulation in PracticelUsing this technique requires hearings to arrive at the respective figures.lThe hearing process creates a regulatory lag that may benefit producers (1950s & 60s) or consumers (1970s & 80s).QuestionlWho is benefiting in the 1990s?The Social Costs of Monopoly Power69第第 10章章MonopsonyA monopsony is a market in which there is a single buyer.An oligopsony is a market with only a few buyers.Monopsony power is the ability of the buyer to affect the price of the good and pay less than the price that would exist in a competitive market.70第第 10章章MonopsonyCompetitive BuyerlPrice takerlP = Marginal expenditure = Average expenditurelD = Marginal value71第第 10章章Competitive BuyerCompared to Competitive SellerQuantityQuantity$/Q$/QAR = MRD = MVME = AEP*Q*ME = MV at Q*ME = P*P* = MVP*Q*MCMR = MCP* = MRP* = MCBuyerSeller72第第 10章章MES = AEThe market supply curve is the monopsonistsaverage expenditure curveMonopsonist BuyerQuantity$/QMVQ*mP*mMonopsonyME P & above SPCQCCompetitiveP = PCQ = Q+C73第第 10章章Monopoly and MonopsonyQuantityARMRMC$/QQCPCMonopolyNote: MR = MC; AR MC; P MCP*Q*74第第 10章章Monopoly and MonopsonyQuantity$/QMVMES = AEQ*P*PCQCMonopsonyNote: ME = MV;ME AE; MV P75第第 10章章Monopoly and MonopsonyMonopolylMR MClQm PCMonopsonylME PlP MVlQm QClPm PC76第第 10章章Monopsony PowerA few buyers can influence price (e.g. automobile industry).Monopsony power gives them the ability to pay a price that is less than marginal value. 77第第 10章章Monopsony PowerThe degree of monopsony power depends on three similar factors.1) Elasticity of market supplyuThe less elastic the market supply, the greater the monopsony power.78第第 10章章Monopsony PowerThe degree of monopsony power depends on three similar factors.2) Number of buyersuThe fewer the number of buyers, the less elastic the supply and the greater the monopsony power.79第第 10章章Monopsony PowerThe degree of monopsony power depends on three similar factors.3) Interaction Among BuyersuThe less the buyers compete, the greater the monopsony power.80第第 10章章MES = AEMES = AEMonopsony Power:Elastic versus Inelastic SupplyQuantityQuantity$/Q$/QMVMVQ*P*MV - P*P*Q*MV - P*81第第 10章章ADeadweight Loss fromMonopsony PowerDetermining the deadweight loss in monopsonylChange in sellers surplus = -A-ClChange in buyers surplus = A - BlChange in welfare = -A - C + A - B = -C - BlInefficiency occurs because less is purchasedQuantity$/QMVMES = AEQ*P*PCQCBCDeadweight Loss82第第 10章章Monopsony PowerBilateral MonopolylBilateral monopoly is rare, however, markets with a small number of sellers with monopoly power selling to a market with few buyers with monopsony power is more common.The Social Costs of Monopsony Power83第第 10章章Monopsony PowerQuestionlIn this case, what is likely to happen to price?The Social Costs of Monopsony Power84第第 10章章Limiting Market Power: The Antitrust LawsAntitrust Laws:lPromote a competitive economylRules and regulations designed to promote a competitive economy by:uProhibiting actions that restrain or are likely to restrain competitionuRestricting the forms of market structures that are allowable85第第 10章章Sherman Act (1890)lSection 1uProhibits contracts, combinations, or conspiracies in restraint of tradelExplicit agreement to restrict output or fix priceslImplicit collusion through parallel conductLimiting Market Power: The Antitrust Laws86第第 10章章1983 lSix companies and six executives indicted for price of copper tubing1996lArcher Daniels Midland (ADM) pleaded guilty to price fixing for lysine - three sentenced to prison in 1999Limiting Market Power: The Antitrust LawsExamples of Illegal Combinations87第第 10章章1999lRoche A.G., BASF A.G., Rhone-Poulenc and Takeda pleaded guilty to price fixing of vitamins - fined more than $1 billion.Limiting Market Power: The Antitrust LawsExamples of Illegal Combinations88第第 10章章Sherman Act (1890)lSection 2uMakes it illegal to monopolize or attempt to monopolize a market and prohibits conspiracies that result in monopolization. Limiting Market Power: The Antitrust Laws89第第 10章章Clayton Act (1914)1) Makes it unlawful to require a buyer or lessor not to buy from a competitor2) Prohibits predatory pricingLimiting Market Power: The Antitrust Laws90第第 10章章Clayton Act (1914)3) Prohibits mergers and acquisitions if they “substantially lessen competition” or “tend to create a monopoly”Limiting Market Power: The Antitrust Laws91第第 10章章Robinson-Patman Act (1936)lProhibits price discrimination if it is likely to injure the competitionLimiting Market Power: The Antitrust Laws92第第 10章章Federal Trade Commission Act (1914, amended 1938, 1973, 1975)1) Created the Federal Trade Commission (FTC)2) Prohibitions against deceptive advertising, labeling, agreements with retailer to exclude competing brandsLimiting Market Power: The Antitrust Laws93第第 10章章Antitrust laws are enforced three ways:1) Antitrust Division of the Department of JusticeuA part of the executive branch-the administration can influence enforcementuFines levied on businesses; fines and imprisonment levied on individualsLimiting Market Power: The Antitrust Laws94第第 10章章Antitrust laws are enforced three ways:2) Federal Trade CommissionuEnforces through voluntary understanding or formal commission orderLimiting Market Power: The Antitrust Laws95第第 10章章Antitrust laws are enforced three ways:3) Private ProceedingsuLawsuits for damagesuPlaintiff can receive treble damagesLimiting Market Power: The Antitrust Laws96第第 10章章Two ExampleslAmerican Airlines - Price fixinglMicrosoftuMonopoly poweruPredatory actionsuCollusionLimiting Market Power: The Antitrust Laws97第第 10章章SummaryMarket power is the ability of sellers or buyers to affect the price of a good.Market power can be in two forms: monopoly power and monopsony power.98第第 10章章SummaryMonopoly power is determined in part by the number of firms competing in the market.Monopsony power is determined in part by the number of buyers in the market.99第第 10章章SummaryMarket power can impose costs on society.Sometimes, scale economies make pure monopoly desirable.We rely on the antitrust laws to prevent firms from obtaining excessive market power.100第第 10章章 End of Chapter 10Market Power:Market Power:Monopoly and Monopoly and MonopsonyMonopsony101第第 10章章