National income accounts chapter 12 1 national income accounting a recall variables from closed economy macro classes. It must be mentioned here that the word few does not indicate any specific numerical value. Also, one firm is likely to emerge as the only seller. So, the monopoly produces too little output and charges too high a price compared to the efficient outcome generated by a perfectly competitive market. No free entry otherwise the number of sellers would not have been fixed 4. We saw that in perfect competition there are many firms, that produce the same product and are price takers. A resource is scarce when it is not freely available when its price exceeds zero. The products or services sold under oligopolistic market structure can be homogeneous or heterogeneous. The textbook by pepall, richards and norman covers most of the material in more detail. The monopolist has to charge the same unitprice to the same type of consumers. Some types of price discrimination involve verifying consumer types, e. Interest and equivalence an investment project can be described by its cash.
Monopoly lecture notes monopoly monopoly is a market. Because theproducts are differentiated substitutes, but not perfect substitutes, each. Y gross national product gnp, total value of all final goods and services produced by a countrys factors of production. Introduction to monopolies as we saw in the last lecture, an industry in which individual firms have some control over setting the price of their output is called an imperfectly competitive industry. Industrial economics page 3 professor guillermo gallego notes on chapter 2.
Monopoly next focus on extreme case where entry ruled out. Chapter 15 monopoly lecture notes 16 econ 201 studocu. An oligopoly composed of only two firms is called a duopoly. The natural monopoly results because only one large firm can always produce at a lower cost while at d. Lecture 11 theory of monopolistic competition economics. Ecn 112 chapter 14 lecture notes mesa community college. Monopoly monopoly is a market structure in which one firm makes up the entire market. The lectures are based on my lecture notes, which will be posted prior to each class. Lectures notes for oligopoly michigan state university.
Average, and marginal revenue 0 liters k11 k0 k10 k10 note that p ar mr. Single sellers of gas in victoria essobhp, from bass strait, south australia and nsw a consor tium, from the cooper basin. Lecture 10 monopoly power and pricing strategies business 5017 managerial economics kam yu fall 20. The only relevant costs are marginal costs, costs that vary with your decision to produce more or less. Ecn 112 chapter 15 lecture notes mesa community college. Arcs above and below the array on the right go between parents and children. What happens to price, output, and quantity if costs go up in a competitive industry. Monopoly lecture notes economics 201 with even at miami university of ohio. I also monopoly will never operate on inelastic part of demand curve 1 6. It represents the net social benefits from the lost output from having a monopoly in the market rather than perfect. View notes chapter10 lecture notes micro econ from econ 1p91 at brock university. If necessary, swap ai with the larger of the two children to preserve heap property. Lecture notes on price discrimination october 16 and 18, 2012 on price discrimination price discrimination is when the same rm charges di erent prices to di erent people for the same product.
Firm 1 and firm 2 firms produce a homogeneous product. A firm produces a product with no close substitutes, and. However, product differentiation, as discussed above, also by itself causes demand to be downward sloping. If the firm lowers its price, it earns less revenue than it otherwise could.
October 22, 2015 may 24, 2016 tutorschoolgrinds exam notes, market structures notes, micro notes market structures, perfect competition the market structures move from least control to most control so lets begin with the type of market with least influence over ones own destiny. Overview define monopoly natural monopoly, bilateral monopoly emergence of monopoly natural monopoly bilateral monopoly production and pricing decisions a rule of thumb for pricing pricing in monopoly market measuring monopoly power effect of. Monopoly lecture notes economics linkedin slideshare. Monopoly summer 2009 third degree price discrimination assumptions. Practical multiple choice questions, chapters 15 lecture notes, lecture 7 the cost of production lecture notes, lecture 8 profit maximization and competitive supply lecture notes, lecture game theory and competitive strategy lecture notes, lecture 17 markets with asymmetric information walter nicholsonsolutionary microeconomic theory. Market structure part i perfect competition and monopoly. Many buyers, a small but fixed number of sellers a few sellers but more than onefor what follows assume there are only two 2. This is an example of what is known as the indifference principle. Lecture notes, lecture 12 monopolistic competition and.
A market is a pure monopoly when there is only one firm producing all of the goods. And just as its hard to find a market that really seems perfectly competitive in all respects. Homogeneous product not a necessary assumption, but let us keep it for simplicity 3. The purpose of managerial economics is to provide economic terminology and reasoning for the improvement of managerial decisions. The perfect competitor has to decide how much to produce. Oligopoly is a market form in which there are only a few firms in the industry with many buyers. The course is about industrial projects and investments.
Varian 466469 competitive labor market with many identical, expected profitmaximizing firms. Scribd is the worlds largest social reading and publishing site. Enterprising students use this website to learn ap class material, study for class quizzes and tests, and to brush up on course material before the big exam day. National income accounting reference chapter 5 learning objectives 5.
Perfect competition the perfect competitor accepts price as given. Industrial organization matt shum hss, california institute of. Lecture notes professor guillermo gallego fall 2002 these lecture notes summarize, and at times complement the material in the textbook. Chapter 10 notes pure monopoly one student to another. Advanced engineering economics by park and sharpebette.
Unlike the more famous rothschildstiglitz 1976 frameworkof competitive. Some lecture notes on the insurer as a monopolist john morgan haas school of business and department of economics university of california, berkeley 1 overview this set of lecture notes studies a classic example of adverse selections insurance markets. Department of justice, with the attorneys general of 20 states and the district of columbia. Lecture 9 monopoly 2 why monopolies arise the fundamental. Monopolistic competition is characterized by four factors. Lecture 9 agsm2004 page 3 monopoly resources a key resource, such as a single seller of bore water in a town, or mining a unique mineral. Market generally means a place or a geographical area, where buyers with money and sellers with their goods meet to exchange goods for money. View notes monopoly lecture notes from economics 201 at harper college. Introduction to oligopolies we have studied two types of industries. Thus it is a special case where demand elasticity is negative innity. Syllabus for industrial organization ec 328 fall, 2007. The sources of growth a the aggregate production function b measuring of the apf.
Singlesellerwhoproducesagood howdomonopoliespersist. Monopoly lecture outline monopolies have no close competitors and, therefore, can influence the market price of its productmaking a monopoly firm a price maker although monopolies can control the prices of their goods, their profits are not unlimited. We begin our study of monopoly by considering the price that the monopolist should. Market power is \opposite of pricetaking behavior ec 105. On the other side, a monopolistic industry has just one seller that produces a unique. Y gross national product gnp, total value of all final goods and services produced by a.
Which system is better, a payasyougoor a fully funded system. Why doesnt stock price decline when entry occurs in the product market. This definition is abstract, just as the definition of perfect competition is abstract. Note, however, that there is a onetoone correspondence between the price. Heapsort 63 parametern replaces attributeheapsizea. Pdf monopoly lecture slides economics major academia. Other types involve creating products with di erent levels of attrac. Economic growth intermediate macroeconomic theory costas azariadis 2. Industrial organization joe chen 5 2 monopoly pricing basic assumption. Note that, unlike in perfect competition, we draw only a single diagram, rather than sidebyside marketandfirm. In the short run, ignore fixed costs, because they are irrelevant.
Principles of managerial economics open textbooks for. Lecture notes chapter 1 the art and science of economic analysis introduction economics is about choices. Many sellers competing by selling differentiated such as branded products. Lecture notes introduction to the economic analysis of social insurance professor john rust objectives of course. Note that this also implies decreasing marginal cost. Oligopoly notes the nature of oligopoly assumptions of the model.
Lectures notes for oligopoly oligopoly a market structure in which there are only a few firms, each of which is relatively large relative to the total industry. Overview define monopoly natural monopoly, bilateral monopoly emergence of monopoly natural monopoly bilateral monopoly production and pricing decisions a rule of thumb for pricing pricing in monopoly market measuring monopoly power effect of tax on monopoly welfare cost of monopoly public. Download course materials principles of microeconomics. Cournot notes free download as powerpoint presentation. The case studies and a couple of empirical studies are used to illustrate how the models can and have been applied. Outline 1 origins of monopoly 2 monopolistic behaviours 3 limits of monopoly power 4 price discrimination 5 application of monopoly theory 6 total cost of monopoly 7 pricing strategies of firms kam yu lu lecture 10 monopoly power and pricing strategies fall 20 2 33. Oligopoly is a particular type of market structure which is characterised by a few sellers and large number buyers. Under perfect competition, firms had to accept the price that was set at the market.
Find materials for this course in the pages linked along the left. Games and information segment vincent crawford spring 2009 revised 26 may 2009 1. The deadweight loss is a measure of the inefficiency of a monopoly. Lecture notes chapter 2 economic tools and economic systems opportunity cost due to scarcity, whenever you make a choice, you must pass up another opportunity. Lecture 12 theory of oligopoly economics notes edurev. One seller no close substitute products the monopolist is a price maker can charge whatever price it wants unbreakable barriers to entry non price competition. Noncollusive oligopolies games and decisions jan zouhar 3 note. Microeconomics monopoly, ch 10 622 17 monopoly o n may 18, 1998, the u. Oligopoly lecture notes economics linkedin slideshare. Etp econ lecture chapter 16 free download as powerpoint presentation.899 46 1501 565 459 693 1603 456 532 184 1313 486 1396 1005 271 1475 1295 984 877 11 1525 1129 496 1293 94 1490 738 176 1153 728 1576 877 1052 1281 1367 1232 416 549 1212 1117 1050 144 405 1416 848 720 439 406 790