【正文】 2020 Pearson AddisonWesley Efficient Public Provision Because the government can tax all the consumers of the public good and force everyone to pay for its provision, public provision overes the freerider problem. If two political parties pete, each is driven to propose the efficient quantity of a public good. A party that proposes either too much or too little can be beaten by one that proposes the efficient amount because more people vote for an increase in benefit. Providing Public Goods 169。 2020 Pearson AddisonWesley Marginal Social Benefit from a Public Good Total benefit is the dollar value that a person places on a given quantity of a good. The greater the quantity of a good, the larger is a person’s total benefit. Marginal benefit is the increase in total benefit that results from a oneunit increase in the quantity of a good. The marginal benefit of a public good diminishes with the quantity of the good provided. Providing Public Goods 169。 2020 Pearson AddisonWesley Common Resources A mon resource is rival and nonexcludable. A unit of a mon resource can be used only once, but no one can be prevented from using what is available. Ocean fish are a mon resource. They are rival because a fish taken by one person isn’t available for anyone else. They are nonexcludable because it is difficult to prevent people from catching them. Public Choices 169。 2020 Pearson AddisonWesley Public Choices Public Choice and Political Marketplace Four groups of decision makers are: ?Voters ?Firms ?Politicians ?Bureaucrats 169。 2020 Pearson AddisonWesley Mergers and Acquisitions The Federal Trade Commission (FTC) uses guidelines to determine which mergers to examine and possibly block. The HerfindahlHirschman index (HHI) is one of those guidelines (explained in Chapter 9). ? If the original HHI is between 1,000 and 1,800, any merger that raises the HHI by 100 or more is challenged. ? If the original HHI is greater than 1,800, any merger that raises the HHI by more than 50 is challenged. Antitrust Law 169。 2020 Pearson AddisonWesley A wave of merger activities at the beginning of the twentieth century produced a stronger antitrust law, the Clayton Act, and created the Federal Trade Commission. The Clayton Act The Clayton Act made illegal specific business practices such as price discrimination, interlocking directorships, and acquisition of a petitor’s shares if the practices “substantially lessen petition or create monopoly.” Antitrust Law 169。 2020 Pearson AddisonWesley Games and Price Wars Price wars might result from a titfortat strategy where there is an additional plication—uncertainty about changes in demand. A fall in demand might lower the price and bring forth a round of titfortat punishment. Repeated Games and Sequential Games 169。D. 169。 2020 Pearson AddisonWesley Nokia’s view of the orld If Apple does no Ramp。 2020 Pearson AddisonWesley A Game of Chicken In the prisoners’ dilemma game, the Nash equilibrium is a dominant strategy equilibrium, by which we mean the best strategy for each player is independent of what the other player does. Not all games have such an equilibrium. One that doesn’t is the game called “chicken.” Oligopoly Games 169。 2020 Pearson AddisonWesley Nash Equilibrium in the Duopolists’ Dilemma The Nash equilibrium is that both firms cheat. The quantity and price are those of a petitive market, and firms make zero economic profit. Oligopoly Games 169。 2020 Pearson AddisonWesley Industry output is 6,000 units, the price falls, and both firms make zero economic profit—the same as in perfect petition. Oligopoly Games 169。 2020 Pearson AddisonWesley The cartel’s marginal cost curve is the horizontal sum of the MC curves of the two firms and the marginal revenue curve is like that of a monopoly. Oligopoly Games 169。 2020 Pearson AddisonWesley An Oligopoly PriceFixing Game A game like the prisoners’ dilemma is played in duopoly. A duopoly is a market in which there are only two producers that pete. Duopoly captures the essence of oligopoly. Cost and Demand Conditions Figure on the next slide describes the cost and demand situation in a natural duopoly. Oligopoly Games 169。 2020 Pearson AddisonWesley Oute If a player makes a rational choice in pursuit of his own best interest, he chooses the action that is best for him, given any action taken by the other player. If both players are rational and choose their actions in this way, the oute is an equilibrium called Nash equilibrium—first proposed by John Nash. Finding the Nash Equilibrium The following slides show how to find the Nash equilibrium. Oligopoly Games 169。 2020 Pearson AddisonWesley In part (b), there is a natural oligopoly market with three firms. A legal oligopoly might arise even where the demand and costs leave room for a larger number of firms. What Is Oligopoly? 169。 2020 Pearson AddisonWesley In some markets, there are only a few firms pete. For example, puter chips are made by Intel and Advanced Micro Devices and each firm must pay close attention to what the other firm is doing. How does petition between just two chip makers work? When a market has only a small number of firms, do they operate in the social interest, like firms in perfect petition? Or do they restrict output to increase profit, like a monopoly? The models of perfect petition and monopoly don’t predict the behavior of the firms we’ve just described. To understand how these markets work, we need the richer models. 169。 2020 Pearson AddisonWesley Strategies Strategies are all the possible actions of each player. Art and Bob each have two possible actions: 1. Confess to the larger crime. 2. Deny having mitted the larger crime. With two players and two actions for each player, there