【正文】 ? cable ? ? Practically speaking there needs to be ? large cost savings to justify the lack of petition Chapter 3: Monopoly and Dominant firm ? Subadditivity ? ? Subadditivity: Cost of producing sum of ? outputs less than the sum of the costs: ? Cost subadditivity is a necessary condition ? for the existence of a natural monopoly ? –Decreasing AC implies subadditivity, but ? can meet subadditivity requirement ? without decreasing AC Chapter 4:Differentiated Goods ? Chapter 4 ? Differentiated Goods: Monopolistic Competition Chapter 4:Differentiated Goods ? Types of Product Differentiation ? ? Horizontally differentiated products: ? Valued differently across consumers ? – Consumers disagree about ranking of goods ? ? Vertically differentiated products: ? Consumers agree more of vertically ? differentiating factor is better but may ? value it at different levels ? – Consumers agree about ranking of goods Chapter 4:Differentiated Goods ? Cereal: Horizontal Differentiation ? ? Consider readytoeat breakfast cereals ? ? Clearly products are differentiated ? – What are some of the characteristics that ? differ across brands of cereals? ? – Do preferences about these characteristics ? vary across consumers or do all consumers ? agree that “more” of some characteristic is ? better? Chapter 4:Differentiated Goods Chapter 4:Differentiated Goods ? Processors: Vertical Differentiation ? Do consumers agree that a faster processor is better? ? Are entire puters horizontally or vertically differentiated? Chapter 4:Differentiated Goods ? Demand for Horizontally ? Differentiated Goods ? ? Representative consumer: Demand is for ? whole goods ? – “Goods are goods” approach ? – Chamberlin (1933) ? ? Characteristics approach: Demand is for ? characteristics bundled into goods ? – Address branch ? – Hotelling (1929) amp。 replacement part inventories) ? ? Tanks amp。 SCP Chapter 6: Market Structure and Market Power Basic Questions in IO ? What firms have market power? Quantify? – Possible measures of market power? ? What factors affect a firm?s ability to exercise market power? – Industry concentration? – Production technology (costs)? – Market size? – Entry/exit costs? Endogenous vs exogenous? Chapter 6: Market Structure and Market Power ? Predict。Chapter 1: Introduction ? Applied Microeconomics ? Applied microeconomics: Any application of microeconomic models to the real world ? – Econometrics often used to assess data ? Some fields in applied microeconomics: ? – Industrial anization ? Chapter 1 Introduction: ? Industrial Organization Chapter 1: Introduction ? – Urban economics ? – Economics of education ? – Labor economics Chapter 1: Introduction ? IO: Industrial Organization ? ? Industry: Any largescale business activity ? – Steel ? – Hotels ? – Banking ? ? IO: Study of firm behavior, the overall structure of markets, and the implications on the welfare of consumers, producers, and efficiency Chapter 1: Introduction ? Some Sample Questions in IO ? ? Do markets with fewer firms have higher prices? Worse products? ? ? What affects nature of products offered? ? ? Why do we observe huge profits in an industry but no new firms entering? ? ? Can existing firms keep out new petitors? When would they want to? ? ? When should government allow mergers? Chapter 1: Introduction ? Market Power ? ? Two simple models of firm behavior: ? – Perfect petition: Model predicts p = mc ? – Monopoly: Model predicts p mc ? ? Market power: Ability of a firm to charge a price above marginal costs ? – Does a monopolist have market power? ? ? Industrial anization studies markets where firms have some market power Chapter 1: Introduction ? Perfect Competition Supply side of the market Demand side of the market Chapter 1: Introduction ? Supply Curve Gone ? ? Beyond model of perfect petition there ? is no simple market supply curve ? – Already familiar with this idea as there is no ? supply curve in a monopoly market ? ? In this course, find market equilibrium for ? models where firms have market power ? – This will not be an exercise in finding an ? intersection of supply and demand as we ? must consider strategic behavior of firms Chapter 1: Introduction ? Supply Side ? ? Assume each firm behaves in a way ? consistent with profit maximization ? – Firm will make decisions such that marginal ? revenue (MR) = marginal cost (MC) ? – Assume firm knows demand and its costs ? ? Possible choice variables include: price, ? quantity, advertising, quality, product ? characteristics, terms of sale (rent or sell) Chapter 1: Introduction ? Demand Side ? All of the models we will study depend ? critically on demand ? – Market demand if no price discrimination ? – Individual demand or market segment ? demand if price discrimination ? ? “Suppose demand is P = 100 – 2Q” ? – How to find demand parameters: 100 and 2? ? – Answer: Data collection and econometrics Chapter 1: Introduction ? Two Branches of IO ? Theoretical IO: Derive predictions using ? microeconomic theory and a set of ? plausible assumptions ? – Focuses on mathematical derivations ? ? Empirical IO: Use data to estimate the ? parameters of a theoretical model ? – Focuses on proper data collection and ? econometric techniques Chapter 1: Introduction ? Theoretical IO: Simple Example ? Suppose a market is perfectly petitive ? – Market demand: P = a – bQ ? – Market supply: P = c + dQ ? ? Find intersection of supply and demand: ? Q* = (a – c) / (b + d) ? ? Comparative statics analysis: Com