【導(dǎo)讀】MinimumPrices. Review. theypayforthegood.producersurplus.producersurplus.WelfareEffects. thedeadweightloss.triangleB.market-clearingpriceP0.Observations:. consumersurplus.Observation. pricecontrols.marketfailure?marketfailure?

　　

【正文】 ket price of $, elasticity of demand is . Market Demand The Demand for Toothbrushes The demand curve for Firm A depends on how much their product differs, and how the firms pete. Chapter 9 Slide 106 At a market price of $, elasticity of demand is . Quantity 10,000 QA $/Q $/Q 20,000 30,000 3,000 5,000 7,000 DA MRA Market Demand Firm A sees a much more elastic demand curve due to petitionEd = . Still Firm A has some monopoly power and charges a price which exceeds MC. MCA The Demand for Toothbrushes Chapter 9 Slide 107 Monopoly Power ? Measuring Monopoly Power ? In perfect petition: P = MR = MC ? Monopoly power: P MC Chapter 9 Slide 108 Monopoly Power ? Lerner’s Index of Monopoly Power ? L = (P MC)/P ?The larger the value of L (between 0 and 1) the greater the monopoly power. ? L is expressed in terms of Ed ?L = (P MC)/P = 1/Ed ?Ed is elasticity of demand for a firm, not the market Chapter 9 Slide 109 Monopoly Power ? Monopoly power does not guarantee profits. ? Profit depends on average cost relative to price. Chapter 9 Slide 110 Monopoly Power ? The Rule of Thumb for Pricing ? Pricing for any firm with monopoly power ?If Ed is large, markup is small ?If Ed is small, markup is large ? ?dEMCP11 ??Chapter 9 Slide 111 Elasticity of Demand and Price Markup $/Q $/Q Quantity Quantity AR MR MR AR MC MC Q* Q* P* P* P*MC The more elastic is demand, the less the markup. Chapter 9 Slide 112 Markup Pricing: Supermarkets to Designer Jeans ? Supermarkets ? ?M C. a b ov e 11%10 a b ou t s e t P r i c e s s t o r e s i n d i v i d u a l f o r 3.p r o d u c t S i m i l ar 2.f i r m s S e v e r a l 1..5)(.410MCMCMCPEd???????Chapter 9 Slide 113 ? Convenience Stores ? ?M C. a b o v e 2 5 % a b o u t s e t P r i c e s 3.t h e m a t e sd i f f e r e n t i eCo n v e n i e n c 2.tss u p e r m a r k e t h a n p r i c e s Hi g h e r 1..5)(.45MCMCMCPEd???????Markup Pricing: Supermarkets to Designer Jeans Chapter 9 Slide 114 ? Convenience stores have more monopoly power. ? Question: ? Do convenience stores have higher profits than supermarkets? Markup Pricing: Supermarkets to Designer Jeans Convenience Stores Chapter 9 Slide 115 The Pricing of Prerecorded Videocassettes 1985 1999 Title Retail Price($) Title Retail Price($) Purple Rain $ Austin Powers $ Raiders of the Lost Ark A Bug’s Life Jane Fonda Workout There’s Something about Mary The Empire Strikes Back TaeBo Workout An Officer and a Gentleman Lethal Weapon 4 Star Trek: The Motion Picture Men in Black Star Wars Armageddon Chapter 9 Slide 116 ? What Do You Think? ? Should producers lower the price of videocassettes to increase sales and revenue? The Pricing of Prerecorded Videocassettes Chapter 9 Slide 117 Sources of Monopoly Power ? Why do some firm’s have considerable monopoly power, and others have little or none? ? A firm’s monopoly power is determined by the firm’s elasticity of demand. Chapter 9 Slide 118 Sources of Monopoly Power ? The firm’s elasticity of demand is determined by: 1) Elasticity of market demand 2) Number of firms 3) The interaction among firms Chapter 9 Slide 119 The Social Costs of Monopoly Power ? Monopoly power results in higher prices and lower quantities. ? However, does monopoly power make consumers and producers in the aggregate better or worse off? Chapter 9 Slide 120 B A Lost Consumer Surplus Deadweight Loss Because of the higher price, consumers lose A+B and producer gains AC. C Deadweight Loss from Monopoly Power Quantity AR MR MC QC PC Pm Qm $/Q Chapter 9 Slide 121 ? Rent Seeking ? Firms may spend to gain monopoly power ?Lobbying ?Advertising ?Building excess capacity The Social Costs of Monopoly Power Chapter 9 Slide 122 ? 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 Power Chapter 9 Slide 123 ? Price Regulation ? Recall that in petitive markets, price regulation created a deadweight loss. ? Question: ? What about a monopoly? The Social Costs of Monopoly Power Chapter 9 Slide 124 AR MR MC Pm Qm AC P1 Q1 Marginal revenue curve when price is regulated to be no higher that P1. If left alone, a monopolist produces Qm and charges Pm. If price is lowered to P3 output decreases and a shortage exists. For output levels above Q1 , the original average and marginal revenue curves apply. If price is lowered to PC output increases to its maximum QC and there is no deadweight loss. Price Regulation $/Q Quantity P2 = PC Qc P3 Q3 Q’3 Any price below P4 results in the firm incurring a loss. P4 Chapter 9 Slide 125 ? Natural Monopoly ? A 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 Power Chapter 9 Slide 126 Regulating the Price of a Natural Monopoly $/Q Natural monopolies occur because of extensive economies of scale Quantity Chapter 9 Slide 127 MC AC AR MR $/Q Quantity Setting the price at Pr yields the largest possible output。excess profit is zero. Qr Pr PC QC If the price were regulate to be PC, the firm would lose money and go out of business. Pm Qm Unregulated, the monopolist would produce Qm and charge Pm. Regulating the Price of a Natural Monopoly Chapter 9 Slide 128 ? Regulation in Practice ? It is very difficult to estimate the firm39。