《产业组织与管理经济学：lecture 2-market welfare》由会员分享，可在线阅读，更多相关《产业组织与管理经济学：lecture 2-market welfare（26页珍藏版）》请在金锄头文库上搜索。
1、Chapter 2 The Welfare Economicsof Market PowerChina Mobile service plan in mainlandChina Mobile service plan in HongKongTelecommunication in Hong Kong香港市场上共有17家电信运营商，其中5家提供LTE商用服务，大多都推出的类似价格的优惠服务套餐。数码通(旗下产品SMARTONE)资费68港元的套餐，含有1700分钟通话，无限数据用量；和记电信(3HK)一款套餐含有1200分钟基本通话，900分钟网内通话，15个月免费3G数据流量，资费69港元。C
2、SL(旗下品牌One2Free)的一款57港元套餐，包括基本通话1800分钟和10MB 3G网络；SMARTONE推出的51港元套餐，含有基本通话1100分钟，网内通话500分钟，10MB数据流量。What welfare economics allows us to do?it provides a standard to measure market performance and the effects of firm behavior.efficiencyOutline2.1 profit maximization 2.2 perfect competition 2.3 Efficie
3、ncy 2.4 Market Power 2.5 Market Power and Public Policy2.1 Profit Maximization The profit function: consider the effect of a change in output on profits: profit-maximizing rule: 2.2 Perfect Competition4 standard assumptions: Economies of scale are small relative to the size of the market. Homogeneou
4、s output Perfect information No entry or exit barriersExample:10 firms sell beer in an island, assumes no difference in beer. How to decide the amount of firm i to make the most money?price-takingSuppose that you were hired as a consultant by firm i. What advice would you provide regarding the profi
5、t-maximizing output?p is constant , does not depend on its choice of q Due to profit-maximizing rule : is the profit-maximizing output Market SupplyFor any p , its the output that all of the firms in the industry would like to supply: : the supply function of firm i , : the market supply function. M
6、arket EquilibriumAt , firms can profit-maximizing and consumers can utility-maximizing: Figure 2.1 Competitive Equilibrium: (a) Firm; (b) MarketQuasi-rents: the difference between total revenues and avoidable costs in the short-run2.3 Efficiency Consumer SurplusDefinition: It is the difference betwe
7、en consumer s willingness to pay (WTP) and the price actually paid WTP P2.3 Efficiency Producer SurplusQuasi-rents provide a measure of how much better off producers are from trading, often called producer surplus2.3 Efficiency Total SurplusDefinition: the sum of consumer and producer surplus for a
8、given quantity2.3 Efficiency Pareto OptimalityDefinition:Pareto optimal : an outcome is Pareto optimal if it is not possible to make one person better off without making another worse offPareto improvement (PI): a move from allocation or outcome A to B that makes someone better offwithout making som
9、eone else worse offpotential Pareto improvement (PPI): if the winners could compensate the losers and still be better off, but they dont. An outcome that maximizes total surplus is Pareto optimal which is efficient.2.4 Market PowerDefinition:A firm has market power if it finds it profitable to raise
10、 price above marginal cost.Supply side substitutionDemand side substitutionIf productshomogeneousOr not? differentiatedOr not?Examples Supply side substitution, demand side substitution and market powerSupply side substitutionIn the early 1980s, the only artificial sweetener that didnt appear to cau
11、se cancer in rats was aspartame. Other firms were excluded from producing aspartame by the patents of the sole producer, the NutraSweet Company.The Organization of Petroleum Exporting Countries (OPEC) continued to dominate the world market for crude oil in the mid-1990s. Demand side substitutionMicr
12、osoftA firm with market power is often called a price maker. Market Power and Pricing Monopoly PricingThe profit function of the monopolist :revenue function: profit-maximizing output level should: Market Power and Pricing Inefficiency of Monopoly Pricingdeadweight loss (DWL): the difference between
13、 the total surplus under monopoly and maximum total surplusan opportunity cost to societyExercise 2.1 Monopoly Pricing with Constant Marginal Costs and Linear DemandSuppose (i) demand is linear , A and b0(ii) marginal cost is constant and equal to c Find the monopoly price and outputSolutionUse Subs
14、tituting both and into the firms profit function:The size of the DWL equals the area of the dark triangle:The socially optimal quantity is the amount demanded when price equals marginal cost:Consumer surplus isComparing consumer surplus, monopoly profits, and DWL in this case, we see that CS= DWL an
15、d each is half of monopoly profit According to Factor out of the left-hand sideThe price elasticity of demand: Measurement and Determinants of Market PowerWhat can we learn from this index? it is defined as the ratio of the firms profit margin and its price. It is a measure of market power since it
16、is increasing in the price distortion between price and marginal cost. It shows that the market power of a firm depends on the elasticity of demand . Then we can get Lerner index ( L ): The Determinants of Deadweight Loss The size of DWL depends on both the Lerner index and thequantity distortion. D
17、WL associated with monopoly pricing is approximately equal to:dP and dQ is the difference in price and quantity between competitive and monopoly outcomeassume constant costs: Harberger (1954) assumes that the elasticity of demand was one and found the DWL from the exerciseof market power in the manu
18、facturing sector in the United States based on this was approximately 0.1% of GNP. Cowling and Mueller (1978) assumes that all firms are monopolists , observe that if a firm is a monopolist and profit maximizes：They based on this suggest that DWL could be on the order of 4% of GNP.2.5 Market Power a
19、nd Public Policy Behavior that creates , maintains, or enhances market power should be prohibited because of DWL from market power.government- Regulation to limit prices - Antitrust laws to limit acquisition, protection, and extension of market power. To determining the legality of a firms behavior we ask: What are its effects on total surplus? Discussion: the legality of price- fixing agreement the legality of Ancillary agreements
