曼昆经济学原理教案2-全英文Chap16

Harcourt,Inc.itemsandderiveditemscopyright2001byHarcourt,Inc.OligopolyChapter 16Copyright 2001 by Harcourt,Inc.Allrightsreserved.Requestsforpermissiontomakecopiesofanypartoftheworkshouldbemailedto:PermissionsDepartment,HarcourtCollegePublishers,6277SeaHarborDrive,Orlando,Florida32887-6777.Harcourt,Inc.itemsandderiveditemscopyright2001byHarcourt,Inc.Imperfect CompetitionImperfect competition refers to those market structures that fall between perfect competition and pure monopoly.Harcourt,Inc.itemsandderiveditemscopyright2001byHarcourt,Inc.Imperfect CompetitionImperfect competition includes industries in which firms have competitors but do not face so much competition that they are price takers.Harcourt,Inc.itemsandderiveditemscopyright2001byHarcourt,Inc.Types of Imperfectly Competitive MarketsuOligopolyuOnly a few sellers,each offering a similar or identical product to the others.uMonopolistic CompetitionuMany firms selling products that are similar but not identical.Harcourt,Inc.itemsandderiveditemscopyright2001byHarcourt,Inc.The Four Types of Market StructureMonopolyOligopolyMonopolistic CompetitionPerfect Competition Tap water Cable TV Tennis balls Crude oil Novels Movies Wheat MilkNumber of Firms?Type of Products?Many firmsOne firmFew firmsDifferentiated productsIdentical productsHarcourt,Inc.itemsandderiveditemscopyright2001byHarcourt,Inc.Markets With Only a Few SellersBecause of the few sellers,the key feature of oligopoly is the tension between cooperation and self-interest.Harcourt,Inc.itemsandderiveditemscopyright2001byHarcourt,Inc.Characteristics of an Oligopoly MarketuFew sellers offering similar or identical productsuInterdependent firmsuBest off cooperating and acting like a monopolist by producing a small quantity of output and charging a price above marginal costHarcourt,Inc.itemsandderiveditemscopyright2001byHarcourt,Inc.A Duopoly ExampleA duopoly is an oligopoly with only two members.It is the simplest type of oligopoly.Harcourt,Inc.itemsandderiveditemscopyright2001byHarcourt,Inc.A Duopoly Example:Demand Schedule for WaterHarcourt,Inc.itemsandderiveditemscopyright2001byHarcourt,Inc.A Duopoly Example:Price andQuantity SupplieduThe price of water in a perfectly competitive market would be driven to where the marginal cost is zero:P=MC=$0Q=120 gallonsuThe price and quantity in a monopoly market would be where total profit is maximized:P=$60Q=60 gallonsHarcourt,Inc.itemsandderiveditemscopyright2001byHarcourt,Inc.A Duopoly Example:Price andQuantity SupplieduThe socially efficient quantity of water is 120 gallons,but a monopolist would produce only 60 gallons of water.uSo what outcome then could be expected from duopolists?Harcourt,Inc.itemsandderiveditemscopyright2001byHarcourt,Inc.Competition,Monopolies,and CartelsuThe duopolists may agree on a monopoly outcome.uCollusionuThe two firms may agree on the quantity to produce and the price to charge.uCarteluThe two firms may join together and act in unison.Harcourt,Inc.itemsandderiveditemscopyright2001byHarcourt,Inc.Competition,Monopolies,and CartelsAlthough oligopolists would like to form cartels and earn monopoly profits,often that is not possible.Antitrust laws prohibit explicit agreements among oligopolists as a matter of public policy.Harcourt,Inc.itemsandderiveditemscopyright2001byHarcourt,Inc.The Equilibrium for an OligopolyA Nash equilibrium is a situation in which economic actors interacting with one another each choose their best strategy given the strategies that all the others have chosen.Harcourt,Inc.itemsandderiveditemscopyright2001byHarcourt,Inc.The Equilibrium for an OligopolyWhen firms in an oligopoly individually choose production to maximize profit,they produce quantity of output greater than the level produced by monopoly and less than the level produced by competition.Harcourt,Inc.itemsandderiveditemscopyright2001byHarcourt,Inc.The Equilibrium for an OligopolyThe oligopoly price is less than the monopoly price but greater than the competitive price(which equals marginal cost).Harcourt,Inc.itemsandderiveditemscopyright2001byHarcourt,Inc.Summary of Equilibrium for an OligopolyuPossible outcome if oligopoly firms pursue their own self-interests:uJoint output is greater than the monopoly quantity but less than the competitive industry quantity.uMarket prices are lower than monopoly price but greater than competitive price.uTotal profits are less than the monopoly profit.Harcourt,Inc.itemsandderiveditemscopyright2001byHarcourt,Inc.A Duopoly Example:Demand Schedule for WaterHarcourt,Inc.itemsandderiveditemscopyright2001byHarcourt,Inc.How the Size of an Oligopoly Affects the Market OutcomeuHow increasing the number of sellers affects the price and quantity:uThe output effect:Because price is above marginal cost,selling more at the going price raises profits.uThe price effect:Raising production lowers the price and the profit per unit on all units sold.Harcourt,Inc.itemsandderiveditemscopyright2001byHarcourt,Inc.How the Size of an Oligopoly Affects the Market OutcomeuAs the number of sellers in an oligopoly grows larger,an oligopolistic market looks more and more like a competitive market.uThe price approaches marginal cost,and the quantity produced approaches the socially efficient level.Harcourt,Inc.itemsandderiveditemscopyright2001byHarcourt,Inc.Game Theory and the Economics of CooperationuGame theory is the study of how people behave in strategic situations.uStrategic decisions are those in which each person,in deciding what actions to take,must consider how others might respond to that action.Harcourt,Inc.itemsandderiveditemscopyright2001byHarcourt,Inc.Game Theory and the Economics of CooperationuBecause the number of firms in an oligopolistic market is small,each firm must act strategically.uEach firm knows that its profit depends not only on how much it produced but also on how much the other firms produce.Harcourt,Inc.itemsandderiveditemscopyright2001byHarcourt,Inc.The Prisoners DilemmaThe prisoners dilemma provides insight into the difficulty in maintaining cooperation.Often people(firms)fail to cooperate with one another even when cooperation would make them better off.Harcourt,Inc.itemsandderiveditemscopyright2001byHarcourt,Inc.The Prisoners DilemmaBonnies DecisionConfessRemain SilentConfessRemain SilentClydes DecisionClyde gets 8 yearsBonnie gets 8 yearsBonnie gets 20 yearsBonnie gets 1 yearBonnie goes freeClyde gets20 yearsClyde gets 1 yearClyde goes freeHarcourt,Inc.itemsandderiveditemscopyright2001byHarcourt,Inc.The Prisoners DilemmaThe dominant strategy is the best strategy for a player to follow regardless of the strategies pursued by other players.Harcourt,Inc.itemsandderiveditemscopyright2001byHarcourt,Inc.The Prisoners DilemmaCooperation is difficult to maintain,because cooperation is not in the best interest of the individual player.Harcourt,Inc.itemsandderiveditemscopyright2001byHarcourt,Inc.Oligopolies as a Prisoners DilemmaIraqs DecisionHigh ProductionLow ProductionHigh ProductionLow ProductionIrans DecisionIran gets$40 billionIraq gets$40 billionIraq gets$30 billionIraq gets$50 billionIraq gets$60 billionIran gets$30 billionIran gets$50 billionIran gets$60 billionHarcourt,Inc.itemsandderiveditemscopyright2001byHarcourt,Inc.Oligopolies as a Prisoners DilemmaSelf-interest makes it difficult for the oligopoly to maintain a cooperative outcome with low production,high prices,and monopoly profits.Harcourt,Inc.itemsandderiveditemscopyright2001byHarcourt,Inc.An Arms-Race GameDecision of the United States(U.S.)ArmDisarmArmDisarm Decision of the Soviet Union(USSR)USSR at riskU.S.at riskU.S.at risk and weakU.S.safeU.S.safe and powerfulUSSR at risk and weakUSSR safeUSSR safe and powerfulHarcourt,Inc.itemsandderiveditemscopyright2001byHarcourt,Inc.An Advertising Game Marlboros DecisionAdvertiseDont AdvertiseAdvertiseDont AdvertiseCamels DecisionCamel gets$3 billion profitMarlboro gets$3 billion profitMarlboro gets$2 billion profitMarlboro gets$4 billion profitMarlboro gets$5 billion profitCamel gets$2 billion profitCamel gets$4 billion profitCamel gets$5 billion profitHarcourt,Inc.itemsandderiveditemscopyright2001byHarcourt,Inc.A Common-Resources GameExxons DecisionDrill Two WellsDrill One WellDrill Two WellsDrill One WellArcos DecisionArco gets$4 million profitExxon gets$4 million profitExxon gets$3 million profitExxon gets$5 million profitExxon gets$6 million profitArco gets$3 million profitArco gets$5 million profitArco gets$6 million profitHarcourt,Inc.itemsandderiveditemscopyright2001byHarcourt,Inc.Why People Sometimes CooperateFirms that care about future profits will cooperate in repeated games rather than cheating in a single game to achieve a one-time gain.Harcourt,Inc.itemsandderiveditemscopyright2001byHarcourt,Inc.Jack and Jills Oligopoly GameJacks DecisionSell 40 gallonsSell 30 gallonsSell 40 gallonsSell 30 gallonsJills DecisionJill gets$1,600 profitJack gets$1,600 profitJack gets$1,500 profitJack gets$1,800 profitJack gets$2,000 profitJill gets$1,500 profitJill gets$1,800 profitJill gets$2,000 profitHarcourt,Inc.itemsandderiveditemscopyright2001byHarcourt,Inc.Public Policy Toward OligopoliesCooperation among oligopolists is undesirable from the standpoint of society as a whole because it leads to production that is too low and prices that are too high.Harcourt,Inc.itemsandderiveditemscopyright2001byHarcourt,Inc.Restraint of Trade and the Antitrust LawsuAntitrust laws make it illegal to restrain trade or attempt to monopolize a market.uSherman Antitrust Act of 1890 uClayton Act of 1914Harcourt,Inc.itemsandderiveditemscopyright2001byHarcourt,Inc.Controversies over Antitrust PolicyuAntitrust policies sometimes may not allow business practices that have potentially positive effects:uResale price maintenance uPredatory pricinguTying Harcourt,Inc.itemsandderiveditemscopyright2001byHarcourt,Inc.Resale Price MaintenanceResale price maintenance(or fair trade)occurs when suppliers(like wholesalers)require the retailers that they sell to,to charge customers a specific amount.Harcourt,Inc.itemsandderiveditemscopyright2001byHarcourt,Inc.Predatory PricingPredatory pricing occurs when a large firm begins to cut the price of its product(s)with the intent of driving its competitor(s)out of the market.Harcourt,Inc.itemsandderiveditemscopyright2001byHarcourt,Inc.TyingTying refers to when a firm offers two(or more)of its products together at a single price,rather than separately.Harcourt,Inc.itemsandderiveditemscopyright2001byHarcourt,Inc.SummaryuOligopolists maximize their total profits by forming a cartel and acting like a monopolist.uIf oligopolists make decisions about production levels individually,the result is a greater quantity and a lower price than under the monopoly outcome.Harcourt,Inc.itemsandderiveditemscopyright2001byHarcourt,Inc.SummaryuThe prisoners dilemma shows that self-interest can prevent people from maintaining cooperation,even when cooperation is in their mutual self-interest.uThe logic of the prisoners dilemma applies in many situations,including oligopolies.Harcourt,Inc.itemsandderiveditemscopyright2001byHarcourt,Inc.SummaryuPolicymakers use the antitrust laws to prevent oligopolies from engaging in behavior that reduces competition.Harcourt,Inc.itemsandderiveditemscopyright2001byHarcourt,Inc.Graphical ReviewHarcourt,Inc.itemsandderiveditemscopyright2001byHarcourt,Inc.The Four Types of Market StructureMonopolyOligopolyMonopolistic CompetitionPerfect Competition Tap water Cable TV Tennis balls Crude oil Novels Movies Wheat MilkNumber of Firms?Type of Products?Many firmsOne firmFew firmsDifferentiated productsIdentical productsHarcourt,Inc.itemsandderiveditemscopyright2001byHarcourt,Inc.The Prisoners DilemmaBonnies DecisionConfessRemain SilentConfessRemain SilentClydes DecisionClyde gets 8 yearsBonnie gets 8 yearsBonnie gets 20 yearsBonnie gets 1 yearBonnie goes freeClyde gets20 yearsClyde gets 1 yearClyde goes freeHarcourt,Inc.itemsandderiveditemscopyright2001byHarcourt,Inc.Oligopolies as a Prisoners DilemmaIraqs DecisionHigh ProductionLow ProductionHigh ProductionLow ProductionIrans DecisionIran gets$40 billionIraq gets$40 billionIraq gets$30 billionIraq gets$50 billionIraq gets$60 billionIran gets$30 billionIran gets$50 billionIran gets$60 billionHarcourt,Inc.itemsandderiveditemscopyright2001byHarcourt,Inc.An Arms-Race GameDecision of the United States(U.S.)ArmDisarmArmDisarm Decision of the Soviet Union(USSR)USSR at riskU.S.at riskU.S.at risk and weakU.S.safeU.S.safe and powerfulUSSR at risk and weakUSSR safeUSSR safe and powerfulHarcourt,Inc.itemsandderiveditemscopyright2001byHarcourt,Inc.An Advertising Game Marlboros DecisionAdvertiseDont AdvertiseAdvertiseDont AdvertiseCamels DecisionCamel gets$3 billion profitMarlboro gets$3 billion profitMarlboro gets$2 billion profitMarlboro gets$4 billion profitMarlboro gets$5 billion profitCamel gets$2 billion profitCamel gets$4 billion profitCamel gets$5 billion profitHarcourt,Inc.itemsandderiveditemscopyright2001byHarcourt,Inc.A Common-Resources GameExxons DecisionDrill Two WellsDrill One WellDrill Two WellsDrill One WellArcos DecisionArco gets$4 million profitExxon gets$4 million profitExxon gets$3 million profitExxon gets$5 million profitExxon gets$6 million profitArco gets$3 million profitArco gets$5 million profitArco gets$6 million profitHarcourt,Inc.itemsandderiveditemscopyright2001byHarcourt,Inc.Jack and Jills Oligopoly GameJacks DecisionSell 40 gallonsSell 30 gallonsSell 40 gallonsSell 30 gallonsJills DecisionJill gets$1,600 profitJack gets$1,600 profitJack gets$1,500 profitJack gets$1,800 profitJack gets$2,000 profitJill gets$1,500 profitJill gets$1,800 profitJill gets$2,000 profit