Microeconomics Lecture Outline
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Economics of Competition in the U.S. Livestock Industry Clement E. Ward
Economics of Competition in the U.S. Livestock Industry Clement E. Ward, Professor Emeritus Department of Agricultural Economics Oklahoma State University January 2010 Paper Background and Objectives Questions of market structure changes, their causes, and impacts for pricing and competition have been focus areas for the author over his entire 35-year career (1974-2009). Pricing and competition are highly emotional issues to many and focusing on factual, objective economic analyses is critical. This paper is the author’s contribution to that effort. The objectives of this paper are to: (1) put meatpacking competition issues in historical perspective, (2) highlight market structure changes in meatpacking, (3) note some key lawsuits and court rulings that contribute to the historical perspective and regulatory environment, and (4) summarize the body of research related to concentration and competition issues. These were the same objectives I stated in a presentation made at a conference in December 2009, The Economics of Structural Change and Competition in the Food System, sponsored by the Farm Foundation and other professional agricultural economics organizations. The basis for my conference presentation and this paper is an article I published, “A Review of Causes for and Consequences of Economic Concentration in the U.S. Meatpacking Industry,” in an online journal, Current Agriculture, Food & Resource Issues in 2002, http://caes.usask.ca/cafri/search/archive/2002-ward3-1.pdf. This paper is an updated, modified version of the review article though the author cannot claim it is an exhaustive, comprehensive review of the relevant literature. Issue Background Nearly 20 years ago, the author ran across a statement which provides a perspective for the issues of concentration, consolidation, pricing, and competition in meatpacking. -
Application of Game Theory in Swedish Raw Material Market Rami Al-Halabi 2020-06-12
Application of game theory in Swedish raw material market Rami Al-Halabi 2020-06-12 Application of game theory in Swedish raw material market Investigating the pulpwood market Rami Al-Halabi Dokumenttyp – Självständigt arbete på grundnivå Huvudområde: Industriell organisation och ekonomi GR (C) Högskolepoäng: 15 HP Termin/år: VT2020 Handledare: Soleiman M. Limaei Examinator: Leif Olsson Kurskod/registreringsnummer: IG027G Utbildningsprogram: Civilingenjör, industriell ekonomi i Application of game theory in Swedish raw material market Rami Al-Halabi 2020-06-12 Sammanfattning Studien går ut på att analysera marknadsstrukturen för två industriföretag (Holmen och SCA) under antagandet att båda konkurrerar mot varandra genom att köpa rå material samt genom att sälja förädlade produkter. Produktmarknaden som undersöks är pappersmarknaden och antas vara koncentrerad. Rå materialmarknaden som undersöks är massavedmarknaden och antas karaktäriseras som en duopsony. Det visade sig att Holmen och SCA köper massaved från en stor mängd skogsägare. Varje företag skapar varje månad en prislista där de bestämmer bud priset för massaved. Priset varierar beroende på region. Både SCA och Holmen väljer mellan två strategiska beslut, antigen att buda högt pris eller lågt pris. Genom spelteori så visade det sig att båda industriföretagen använder mixade strategier då de i vissa tillfällen budar högt och i andra tillfällen budar lågt. Nash jämviktslägen för mixade strategier räknades ut matematiskt och analyserades genom dynamisk spelteori. Marknadskoncentrationen för pappersmarknaden undersöktes via Herfindahl-Hirschman index (HHI). Porters femkraftsmodell användes för att analysera industri konkurrensen. Resultatet visade att produktmarknaden är koncentrerad då HHI testerna gav höga indexvärden mellan 3100 och 1700. Det existerade dessutom ett Nash jämviktsläge för mixade strategier som gav SCA förväntad lönsamhet 1651 miljoner kronor och Holmen 1295 miljoner kronor. -
Market Failure Guide
Market failure guide A guide to categorising market failures for government policy development and evaluation industry.nsw.gov.au Published by NSW Department of Industry PUB17/509 Market failure guide—A guide to categorising market failures for government policy development and evaluation An external academic review of this guide was undertaken by prominent economists in November 2016 This guide is consistent with ‘NSW Treasury (2017) NSW Government Guide to Cost-Benefit Analysis, TPP 17-03, Policy and Guidelines Paper’ First published December 2017 More information Program Evaluation Unit [email protected] www.industry.nsw.gov.au © State of New South Wales through Department of Industry, 2017. This publication is copyright. You may download, display, print and reproduce this material provided that the wording is reproduced exactly, the source is acknowledged, and the copyright, update address and disclaimer notice are retained. To copy, adapt, publish, distribute or commercialise any of this publication you will need to seek permission from the Department of Industry. Disclaimer: The information contained in this publication is based on knowledge and understanding at the time of writing July 2017. However, because of advances in knowledge, users are reminded of the need to ensure that the information upon which they rely is up to date and to check the currency of the information with the appropriate officer of the Department of Industry or the user’s independent advisor. Market failure guide Contents Executive summary -
Buyer Power: Is Monopsony the New Monopoly?
COVER STORIES Antitrust , Vol. 33, No. 2, Spring 2019. © 2019 by the American Bar Association. Reproduced with permission. All rights reserved. This information or any portion thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association. Buyer Power: Is Monopsony the New Monopoly? BY DEBBIE FEINSTEIN AND ALBERT TENG OR A NUMBER OF YEARS, exists—or only when it can also be shown to harm consumer commentators have debated whether the United welfare; (2) historical case law on monopsony; (3) recent States has a monopoly problem. But as part of the cases involving monopsony issues; and (4) counseling con - recent conversation over the direction of antitrust siderations for monopsony issues. It remains to be seen law and the continued appropriateness of the con - whether we will see significantly increased enforcement Fsumer welfare standard, the debate has turned to whether the against buyer-side agreements and mergers that affect buyer antitrust agencies are paying enough attention to monopsony power and whether such enforcement will be successful, but issues. 1 A concept that appears more in textbooks than in case what is clear is that the antitrust enforcement agencies will be law has suddenly become mainstream and practitioners exploring the depth and reach of these theories and clients should be aware of developments when they counsel clients must be prepared for investigations and enforcement actions on issues involving supply-side concerns. implicating these issues. This topic is not going anywhere any time soon. -
Investment Characteristics of Natural Monopoly Companies
Investment Characteristics of Natural Monopoly Companies Škapa Stanislav Abstract This paper explores the possibilities of investment by private investors in natural monopoly companies. The paper analyzes the broad issue of risk measurement with focus on downside risk measurement principle. The main scientific aim is to adopt a more sophisticated and theo- retically advanced statistical technique and apply them to the findings. The preferred method used for the estimation of selected characteristics and ratios was the robust statistical methods and a bootstrap method. Key words: natural monopoly, investor, investment, downside risk 1. INTRODUCTION Natural monopoly companies lead to a variety of economic performance problems: excessive prices, production inefficiencies, costly duplication of facilities, poor service quality and they have potentially undesirable distributional impacts. In the eyes of consumers, it is the high prices and poor service quality that they most probably perceive. However, the question that arises is: what brings the investment into the natural monopoly company to investors? 2. THEORETICAL SOLUTIONS 2.1 Natural monopoly Economists have been analyzing natural monopolies for more than 150 year. Sharkey (1982) provides an overview of the intellectual history of economic analysis of natural monopolies and he concludes that John Stuart Mill was the first to speak of natural monopolies in 1848. One of the main questions is how a natural monopoly should be defined. There are some characteristics which should help to understand what a natural monopoly mean. According Thomas Farrer (1902, referenced by Sharkey, 1982) a natural monopoly is associated with supply and demand of characteristics that include: the product or supplied service must be essential the products must be non-storable the supplier must have a favourable production location. -
Regulation Policies Concerning Natural Monopolies in Developing and Transition Economies
ST/ESA/1999/DP.8 DESA Discussion Paper No. 8 Regulation policies concerning natural monopolies in developing and transition economies S. Ran Kim and A. Horn March 1999 United Nations DESA Discussion Paper Series DESA Discussion Papers are preliminary documents circulated in a limited number of copies and posted on the DESA web site http://www.un.org/esa/papers.htm to stimulate discussion and critical comment. This paper has not been formally edited and the designations and terminology used do not imply the expression of any opinion whatsoever on the part of the United Nations Secretariat. Citations should refer to a “Discussion Paper of the United Nations Department of Economic and Social Affairs.” S. Ran Kim and A. Horn Ms. S. Ran Kim is associate expert and Mr. A. Horn is Deputy Director of the Division for Public Economics and Public Administration, United Nations Department of Economic and Social Affairs, New York. We are very much indebted to valuable comments and suggestions from Mr. Tony Bennett. Comments should be addressed to the authors, c/o Division for Public Economics and Public Administration, Rm. DC1-900, United Nations, New York, N.Y. 10017, or by e-mail to [email protected]. Additional copies of the paper are available from the same address. Authorized for distribution by: Guido Bertucci Director Division for Public Economics and Public Administration Room DC1-928 United Nations New York, NY 10017 Phone: (212) 963-5859/Fax: (212) 963-9681 Email: [email protected] United Nations Department of Economic and Social Affairs Abstract Network industries are often organized as vertically integrated public monopolies. -
Principles of Microeconomics
PRINCIPLES OF MICROECONOMICS A. Competition The basic motivation to produce in a market economy is the expectation of income, which will generate profits. • The returns to the efforts of a business - the difference between its total revenues and its total costs - are profits. Thus, questions of revenues and costs are key in an analysis of the profit motive. • Other motivations include nonprofit incentives such as social status, the need to feel important, the desire for recognition, and the retaining of one's job. Economists' calculations of profits are different from those used by businesses in their accounting systems. Economic profit = total revenue - total economic cost • Total economic cost includes the value of all inputs used in production. • Normal profit is an economic cost since it occurs when economic profit is zero. It represents the opportunity cost of labor and capital contributed to the production process by the producer. • Accounting profits are computed only on the basis of explicit costs, including labor and capital. Since they do not take "normal profits" into consideration, they overstate true profits. Economic profits reward entrepreneurship. They are a payment to discovering new and better methods of production, taking above-average risks, and producing something that society desires. The ability of each firm to generate profits is limited by the structure of the industry in which the firm is engaged. The firms in a competitive market are price takers. • None has any market power - the ability to control the market price of the product it sells. • A firm's individual supply curve is a very small - and inconsequential - part of market supply. -
Monopsony Power, Pay Structure and Training
IZA DP No. 5587 Monopsony Power, Pay Structure and Training Samuel Muehlemann Paul Ryan Stefan C. Wolter March 2011 DISCUSSION PAPER SERIES Forschungsinstitut zur Zukunft der Arbeit Institute for the Study of Labor Monopsony Power, Pay Structure and Training Samuel Muehlemann University of Bern and IZA Paul Ryan King’s College Cambridge Stefan C. Wolter University of Bern, CESifo and IZA Discussion Paper No. 5587 March 2011 IZA P.O. Box 7240 53072 Bonn Germany Phone: +49-228-3894-0 Fax: +49-228-3894-180 E-mail: [email protected] Any opinions expressed here are those of the author(s) and not those of IZA. Research published in this series may include views on policy, but the institute itself takes no institutional policy positions. The Institute for the Study of Labor (IZA) in Bonn is a local and virtual international research center and a place of communication between science, politics and business. IZA is an independent nonprofit organization supported by Deutsche Post Foundation. The center is associated with the University of Bonn and offers a stimulating research environment through its international network, workshops and conferences, data service, project support, research visits and doctoral program. IZA engages in (i) original and internationally competitive research in all fields of labor economics, (ii) development of policy concepts, and (iii) dissemination of research results and concepts to the interested public. IZA Discussion Papers often represent preliminary work and are circulated to encourage discussion. Citation of such a paper should account for its provisional character. A revised version may be available directly from the author. -
Bilateral Oligopoly: Countervailing Market Power
CORE Metadata, citation and similar papers at core.ac.uk Provided by OAR@UM Bilateral Oligopoly: Countervailing Market Power Andrew Brincat [email protected] Abstract: Malta’s economy, minute by any standard, makes for imperfectly competitive market structures. The degree of this competition is quite interesting since many firms, in the wholesale, retail, as well as in other sectors, tend to form part of oligopolistic structures, such as banking, mobile phone service provision, internet service providers, bottled-water manufacturers, insurance, food importers, supermarkets, and new and used car importers. Oligopsony, or the concentration of market power in the hands of a few buyers, may be considered as the other side of the coin. Many studies of oligopsony have focused on retailers who manage to extract prices and conditions from providers or manufacturers that are beneficial to them, but not necessarily to consumers. This paper discusses the degree of oligopoly power and how the firm tends to wield this power. It also discusses the conceptual basis of bilateral oligopoly (oligopoly and oligopsony) and some of its economic and welfare effects. Keywords: oligopsony, market, economy, oligopoly, buyer ligopoly is usually defined as the market structure which is made up of a few firms. Such firms tend to be relatively large Oin comparison to other firms in more competitive market structures. Oligopsony, on the other hand, is the concentration of market buying power in the hands of a few buyers. usually, firms in an oligopolistic output market may be operating as oligopsonists in an input market. This has very important ramifications for the behaviour of such firms in upstream and downstream markets. -
Regulation, Market Structure and Performance in Telecommunications
OECD Economic Studies No. 32, 2001/I REGULATION, MARKET STRUCTURE AND PERFORMANCE IN TELECOMMUNICATIONS By Olivier Boylaud and Giuseppe Nicoletti TABLE OF CONTENTS Introduction ................................................................................................................................. 100 Regulation and market structure in telecommunications: a cross-country perspective ... 102 Past trends in regulatory reform............................................................................................ 103 Summarising regulatory reform for empirical analysis ....................................................... 111 Evaluating the effects of regulatory reform on performance in telecommunications........ 117 The empirical approach taken here...................................................................................... 119 The performance data ............................................................................................................122 Empirical results...................................................................................................................... 124 Conclusions.................................................................................................................................. 133 Annex. Panel Data Estimation Techniques ......................................................................... 139 Bibliography ................................................................................................................................ 141 The authors wish -
The Essential Facilities Doctrine Under United States Antitrust Law
Georgetown University Law Center Scholarship @ GEORGETOWN LAW 2002 The Essential Facilities Doctrine Under United States Antitrust Law Robert Pitofsky Georgetown University Law Center, [email protected] Donna Patterson District of Columbia Bar Jonathan Hooks District of Columbia Bar This information or any portion thereof may not be copied or disseminated in any form or by any means or downloaded or stored in an electronic database or retrieval system without the express written consent of the American Bar Association. This paper can be downloaded free of charge from: https://scholarship.law.georgetown.edu/facpub/346 70 Antitrust L.J. 443-462 (2002) This open-access article is brought to you by the Georgetown Law Library. Posted with permission of the author. Follow this and additional works at: https://scholarship.law.georgetown.edu/facpub Part of the Antitrust and Trade Regulation Commons GEORGETOWN LAW Faculty Publications April 2010 The Essential Facilities Doctrine Under United States Antitrust Law 70 Antitrust L.J. 443-462 (2002) Donna Patterson Robert Pitofsky Jonathan Hooks District of Columbia Bar Professor of Law District of Columbia Bar Georgetown University Law Center [email protected] This paper can be downloaded without charge from: Scholarly Commons: http://scholarship.law.georgetown.edu/facpub/346/ Posted with permission of the author * This information or any portion thereof may not be copied or disseminated in any form or by any means or downloaded or stored in an electronic database or retrieval system without the express written consent of the American Bar Association. THE ESSENTIAL FAC ILITIES DOCTRINE UNDER U.S. ANTITRUST LAW ROBERT PITOFSKY DONNA PATTERSON JONATHAN HOOKS* I. -
Pai723lecture11
McPeak Lecture 11 PAI 723 Monopsony. There is only a single buyer in a market, and this single buyer chooses the price quantity pair from the supply curve. It buys at a price below what the price would be in a competitive market. Supply curve is of the input, the demand curve is the demand of the monopsonist. Without getting into the details, it is conceptually similar to the monopoly case, though the focus is on the supply curve / marginal expenditure curve rather than the demand curve / marginal revenue curve. Know there is a conceptual distinction. Strategic interactions and Game theory. Game theory is a tool to understand why outcomes with higher payoffs may not be possible to obtain if each individual acts in his or her own best interest. The reward associated with an action is not just a function of an individual’s decision but also a function of decisions made and actions taken by others. It is used to understand why a failure to coordinate actions leads us to an outcome that does not maximize welfare of the decision makers, and possibly well-being in our society. Players in a game formulate best response strategies to actions that are possible by other players. Where players are playing best response to each other, we call it a Nash equilibrium. We can describe a Nash equilibrium by the actions taken by players and the resulting payoffs to players. Chicken game, Footloose style. Kevin Bacon (KB) is driving the tractor down the road toward Lunkhead Farm Guy (LFG). Both KB and LFG have to make a decision; go straight or swerve.