成果課件-老師chapter910

Outline

of This

Lecture1. Patterns

of

ImperfectCompetitionDefinitionAlternative

Market

StructuresSources

of

Market

PowerMonopoly

BehaviorReview

of

ElasticityDemand,

MR,

Elasticity,

andTRProfit

ization

ofMonopolyMarginal

PrincipleHui

Wang,

Dept.

of

Applied

Economics,

GSM,

Peking

UniversityPublic

Policies

to

Combat

MarketPowerCompetition

among

the

FewMarket

Power

and

Its

MeasureThree

Cases

of

ImperfectCompetition(Game

Theory)Pricing

Strategy1.

Patterns

of

ImperfectCompetition1.1

Definition

of Imperfect

CompetitionImperfect

Competition

prevails

in

a

industry

wheneverindividual

sellers

can

affect

the

price

of

their

output.Hui

Wang,

Dept.

of

Applied

Economics,

GSM,

Peking

UniversityPerfectCompetitionImperfectCompetitionAbility

to

affectpricesPrice-takerPrice-makerSh of

thedemand

curveHorizontal

LineDownwardsloPrice

elasticityPerfectlyelasticFiniteelasticity1.2

Alternative

Market

Structures1.3

Sources

of Market

PowerSourcesCostEconomy

ofScaleEntry

BarrierLegal

RestrictionHigh

Cost

ofEntryAdvertising

andProductDifferentiationMarket

Structure

Depends

on

Relative

Cost

and

Demand

FactorsIncreasing

Return

to

Scale

(IRS):

Average

cost

decreases

as

firmincreases

outputNatural

Monopoly

:

Industry’s

output

can

be

efficiently

producedonly

by

a

single

firmWith

perfect

IRS,

average

and

marginal

cost

fall

forever.One

firm

is

so

efficient

than

a

collection

of

small

firmsOutlinePatterns

of ImperfectCompetitionMonopoly

BehaviorPublic

Policies

to

Combat

MarketPowerCompetition

among

the

FewPricing

StrategyHui

Wang,

Dept.

of

Applied

Economics,

GSM,

Peking

UniversityOutlinePatterns

of ImperfectCompetitionMonopoly

BehaviorHui

Wang,

Dept.

of

Applied

Economics,

GSM,

Peking

UniversityReview

(Ch.

4)Price

Elasticity

of

Demand:

how

much

thechanges

when

its

price

changes.Formula:ty

demanded

of

a

goodBecause

of

law

of

demand,

demand

usually

decreases

as

priceincreaseFor

convenience,

we

drop

the

minus

signs

so

elasticity

are

all

positiveHui

Wang,

Dept.

of

Applied

Economics,

GSM,

Peking

UniversityChange

in

Price

Elasticity

Along

the

Demand

CurveInelastic8010 20

25

30605040204050Q0Uni

asticityDemand

Function：q=50-0.5PP100ElasticPq=50-0.5PED=0.5(P/q)80104.0060201.5050251.0040300.6720400.252.1

Demand,

MR,

Elasticity,

and

TR12InelasticElastic806050402010050QP0Uni

asticityElasticInelastic25

3040

500

10

20QTRUni

asticity80012501200MR>0MR<0MR=0(MaxR)D10

20

25

30

40MROwn-Price

Elasticity

and

Total

RevenueTotal

revenue：R

=

P

x

QIf

demand

is

elastic,

i.e.,

E<-1，P↓

→

R↑If

demand

is

inelastic,

i.e.,

-1<E<0

，P↓

→

R↓Hui

Wang,

Dept.

of

Applied

Economics,

GSM,

Peking

UniversitySummaryIf

demand

isRelation

of

q

andPEffect

of

q

on

TRValue

of

marginalrevenue

(MR)Elastic

(ED>1)%?q

>

%?pHigher

q

raises

TRMR>0%?q

=

%?pHigher

q

leavesTR

unchangedMR=0Uni astic

(ED=1)Inelastic

(ED<1)%?q

<%?pHigher

q

lowersTRMR<0Table

9-4:

Relationship

of

DemandElasticity,

Output,

Price,

Revenue,

and

MarginalRevenueHui

Wang,

Dept.

of

Applied

Economics,

GSM,

Peking

University2.2

Output

and

Pricing

Decisionsof

Monopoly$QATCDMRQMPMACProfitOutput

Rule:

Produce

at

Qm

such

that

MR(QM)=

MC(QM)Pricing

Rule:

Find

the

corresponding

price

along

the

demand

curve

at

QMPM=P(QM)MCHui

Wang,

Dept.

of

Applied

Economics,

GSM,

Peking

UniversityProfitization

of

Monopoly由于

廠商不再是價(jià)格接受者，因此R曲線的斜率隨產(chǎn)量變化而變化。當(dāng)

M使得MR=MC時(shí)，壟斷廠商的利潤(rùn)達(dá)到最大。$TCQ*Slope

of

TC=MCSlope

of

TR=MR=PizedProfitsR=P(Q)×QR=P×QQMSlope

of

TC=MCSlope

of

TR=MR=P(Q)OutlinePatterns

of ImperfectCompetitionMonopoly

BehaviorPublic

Policies

to

Combat

MarketPowerHui

Wang,

Dept.

of

Applied

Economics,

GSM,

Peking

University3.

Public

Policies

to

Combat

Market

PowerCompetitive

market–

P*,

Q*Consumer

Surplus

(CS)Producer

Surplus

(PS)MonopolyMarginal

Revenue

(MR)PM,QMDecrease

in

CSDecrease

in

PSTransfer

from

CS

to

PSDead

Weight

Loss

(DWL)DMRS

(MC)P*PM

Q*QMDWLOutlinePatterns

of ImperfectCompetitionMonopoly

BehaviorPublic

Policies

to

Combat

MarketPowerCompetition

among

the

FewHui

Wang,

Dept.

of

Applied

Economics,

GSM,

Peking

University4.1

Market

Power

and

Its

MeasureMarket

power:

the

degree

of

control

that

asingle

firm

or

a

small

number

of

firms

haveover

the

price

and

production

decisions

in

anindustryMeasuresConcentration

ratiosHerfindahl-His anIndex

(HHI)Hui

Wang,

Dept.

of

Applied

Economics,

GSM,

Peking

UniversityFour-firm

Concentration

RatioSum

of

the

market

shares

ofthe

four

largest

firms

in

theindustry:

C4

=

S1+S2+S3+S4,where

Si

are

firm

i’s

marketshare0

≤C4

≤

1C4

→

0:

Many

firms

in

themarket;

high

degree

ofcompetition;

Low

marketpowerC4

→

1:

Only

a

few

sellersin

the

market;

low

degreeof

competition;

Highmarket

powerHui

Wang,

Dept.

of

Applied

Economics,

GSM,

Peking

UniversityHerfindahl-His an

IndexHHI

=

sum

of

the

squared

market

share

of

all

firms

in

the

market

×10000HHI

=

10000

×

ΣSi20≤HHI≤10000。In

case

of

monopoly,

HHI=10000In

case

of

infinite

number

of

small

firms,

HHI=0An

example:Consider

a

industry

composed

by

3

firms.

Two

of

them

have

annualsales

of

$10M;

the

other

one

has

an

annual

sale

of

$30M.

What

is

theHHI

of

this

industry?S1=30/50;S2=S3=10/50;HHI=10000×[(30/50)2+(10/50)2+(10/50)2]=4400What

is

the

C4

of

this

industry?Merger

between&Passed

in

August,

2010To

Address

Anti-trust

ConcernsCost

SavingEconomy

of

ScalesSpecial

Arrangement

to

Limit

Market

PowerSouthwest

Airlines,

one

of

Continental

Airlines’

majorcompetitors,

will

be

able

to

enter

Newark

airport

in

NewJerseyGeography

and

Market

DefinitionGlobal

v.s.

Domestic

marketService

scope

ofUnited

Airline:

73

US

cities,

41

internationaldestinations

in

25

countries,

4

continentsInternational

flights

accounts

for

30%

ofrevenueHui

Wang,

Dept.

of

Applied

Economics,

GSM,

Peking

University國(guó)家、區(qū)域和地方市場(chǎng)數(shù)當(dāng)相關(guān)市場(chǎng)是地方性的時(shí)候，使用據(jù)會(huì)低估地方市場(chǎng)的集中度水平。US

Banking

Industry?家級(jí)銀行的誕生（Ever

since在歷史上長(zhǎng)期Thomas

Jefferson)。直至本世紀(jì)二三十年代，不允許任何銀行跨州界開設(shè)分行。有些州甚至不允許分行的存在（single-branch

bank)。其結(jié)果是，的銀行業(yè)由大量的、相互獨(dú)立的、服務(wù)于本地社區(qū)的銀行。直至1994年，全美在

存款保險(xiǎn)公司(FDIC)

的銀行一共有10400個(gè)。銀行業(yè)的行業(yè)集中度在90年代初期遠(yuǎn)遠(yuǎn)低于其他發(fā)達(dá)國(guó)家的水平：In

1994,

the

US

banking

industry

has

about

10,000

commercialbanks,

93%

of

which

have

less

than

$500m

in

assets.The

top

ten

largest

banks

have

only

36.6%

of

total

assets,compared

to

Canada

or

UK

where

4

or

5

banks

hold

about80-90%

of

the

total

assets

(Mishkin

and

Eakins

(2009)).相互獨(dú)立的、本地化的銀行系統(tǒng)其致命弱點(diǎn)是，當(dāng)面對(duì)經(jīng)濟(jì)

時(shí)期時(shí)，由于銀行資產(chǎn)地域分散性差，無(wú)法有效分散風(fēng)險(xiǎn)，

率極高。30年代經(jīng)濟(jì)大的

使得時(shí)期以及80年代末大量中小銀行部門重新審視對(duì)銀行業(yè)實(shí)行地域限制的法令。80年代末以來(lái)，頒布了一系列法令逐漸解除地里擴(kuò)展限制。其中1994年

Riegle-NealInterstate

Bankingand

Branching

EffiencyAct

法令的頒布是

銀行業(yè) Deregulation

的里程碑。該法令規(guī)定允許銀行通過(guò)兼并或新建分行的方式進(jìn)行跨州界的業(yè)務(wù)拓展。Deregulation

使得

銀行業(yè)進(jìn)入了一個(gè)兼并高峰期(consolidation)。Number

of

Bank

Mergers

by

Year100090080070060050040030020010001985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

20062007Country,

State,

and

County

Level

Concentration

RatioFrom

now

on,

we

shall

concentrate

on

the

retail

banking

services

and

lookat

the

deposit

market.In

year

2007,

the

C4

for

the

whole

US

is

0.24305001000.41.6

.8County

level

C4

Distribution

inMean

=

0.85

Median

=

0.88n(C4=1)=454

(out

of

3114)Distribution

of

C4

at

the

County

Level051015.2

1.4

.6

.8C4

in

Deposit

at

the

Sta evel

(year

2007)Distribution

of

C4

at

the

Sta

evelMean

=

0.50

Median

=

0.48In

year

2007,

the

HHI

for

the

whole

US

is

207051015200

1000

2000

3000

4000HHI

in

Deposit

at

the

Sta evel(year2007)Mean

=

728

Median

=

747Distribution

of

HHI

at

the

Staevel050100150200250300350020008000100004000

6000CountylevelHHI

in

DepositMean

=

3138

Median

=

2520n(HHI=10000)=133

(out

of3114)Distribution

of

HHI

at

theCounty

Level當(dāng)相關(guān)市場(chǎng)是地方性的時(shí)候，使用的數(shù)據(jù)會(huì)低估地方市場(chǎng)的集中度水平。由于銀行業(yè)的固有特點(diǎn)，對(duì)于一個(gè)位于Texas中部的消費(fèi)者來(lái)講，與之相關(guān)的零售銀行市場(chǎng)就是其本地市場(chǎng)，而其他49個(gè)州的銀行（特別是中小銀行）提供何種服務(wù)，收取何種費(fèi)用等對(duì)該消費(fèi)者來(lái)說(shuō)意義不大。因此，在很大程度上，零售銀行業(yè)競(jìng)爭(zhēng)具有“本地性”特點(diǎn)。00.050.10.150.20.250.3Changes

in

C4

at

the

National

Level050100150200250Changes

in

HHI

at

the

National

Level24802500252025402560258026002620Changes

in

HHI

at

the

County

Level0.9150.910.9050.90.8950.890.8850.880.8750.87Changes

in

C4

at

the

County

LevelIncrease

by

263%!Decrease

by

2.7%Increase

by

630%!Decrease

by

2.7%OutlinePatterns

of ImperfectCompetitionMonopoly

BehaviorPublic

Policies

to

Combat

MarketPowerCompetition

among

the

FewMarket

Power

and

Its

MeasureThreeCasesof the

Imperfect

CompetitionHui

Wang,

Dept.

of

Applied

Economics,

GSM,

Peking

UniversityCase

1:

Monopolistic

CompetitionConditions

for

monopolistic

competition:There

are

many

buyers

and

sellers;There

is

free

entry

into

and

exit

from

the

industry;Firms

take

other

firms’

prices

as

given;Each

firm

in

the

industry

produces

a

differentiate

productEach

firm

faces

a

downward

slo

demand

curveConsumers

view

differentiated

products

as

close

substitutes:there

exists

some

willingness

to

substituteV.S.Managing

a

Monopolistically

Competitive

FirmLike

a

monopoly,

monopolistically

competitive

firmshave

market

power

that

permits

pricing

abovemarginal

costlevel

of

sales

depends

on

the

price

it

setsBut

…The

presence

of

other

brands

in

themarket

makes

thedemand

for

your

brand

more

elastic

than

if

you

were

amonopolistFree

entry

and

exit

impacts

profitabilityTherefore,

monopolistically

competitive

firms

have

limitedmarket

power.Hui

Wang,

Dept.

of

Applied

Economics,

GSM,

Peking

University$ty

of

Brand

XATCMCDMRQ*P*ACProfitShort-Run

Monopolistic

CompetitionHui

Wang,

Dept.

of

Applied

Economics,

GSM,

Peking

University$ACMCMRP*P1ty

of

BrandXMR1D1DEntryLong

Run

Equilibrium(P

=

AC,

so

zero

profits)Q1

Q*Long-Run

Monopolistic

CompetitionWith

free

entry,

in

thelong-run:Other

“greedy

capitalists”enter,

and

their

newbrands

steal

market

share.This

reduces

the

demandfor

your

product

untily

zeroprofits

are

ultima(price

is

above

themarginal

cost)Case

2.

Rivalry

among

the

FewEntry

barriers

exist,

at

least

in

the

short-run.Thereby

only

a

few

firms

compete

with

eachother

(e.g.,

Duopoly

-

2

firms

compete)Firms

are

interdependent.Strategic

interaction:

occurs

when

each

firm’sbusiness

depends

upon

the

behavior

of

itsrivals

ytical

tool

of

the

strategic

interactionsamong

firms:

Game

TheoryCase

3.

Collusive

OligopolyCollusion:

A

situation

inwhich

two

or

more

firmsjointly

set

their

prices

oroutputs,

divide

the

marketamong

themselves,

or

makeother

business

decisionsjointlyCar :

Ananization

ofindependent

firms,

producingsimilar

products,

that

worktogether

to

raise

prices

andrestrict

outputObstacles

toEffective

CollusioLegal

concernsInstability

of

car :

firms

have

incentive

to“cheat”

on

the

agreement

byCutting

their

pricesIncrease

their

productionWith

price

being

set

at

a

monopoly

level,

more

outputmeans

more

profitsHowever,

as

output

increases,

price

will

go

down

becauseof

the

downward

slo demand

curve)Role

of

international

tradeOutlinePatterns

of ImperfectCompetitionMonopoly

BehaviorPublic

Policies

to

Combat

MarketPowerCompet