第 10章市场势力,
垄断与买方垄断第 10章 Slide 2
本章要讨论的问题垄断垄断势力垄断形成原因垄断的社会成本第 10章 Slide 3
本章要讨论的问题买方垄断买方垄断势力限制市场势力,反垄断法第 10章 Slide 4
完全竞争完全竞争回顾
P = LMC = LRAC
长期内只存在正常利润或经济利润为零
大量生产者和消费者
同质化产品
充分信息
企业是价格的接受者完全竞争
Q Q
P P市场 单个企业
D S
Q0
P0 P0
D = MR = P
q0
LRACLMC
第 10章 Slide 6
完全垄断完全垄断
1) 一个生产者 – 许多消费者
2) 一种产品 (没有替代品 )
3) 市场进入壁垒第 10章 Slide 7
完全垄断完全垄断企业是市场供给方，对其产品的销售能够绝对控制。
当边际收入等于边际成本时，利润达到最大。
第 10章 Slide 8
完全垄断确定边际收入
作为唯一的生产者,垄断企业面对整个市场
假定企业的需求为,
P = 6 - Q
第 10章 Slide 9
总收入、边际收入及平均收入
$6 0 $0 --- ---
5 1 5 $5 $5
4 2 8 3 4
3 3 9 1 3
2 4 8 -1 2
1 5 5 -3 1
价格 数量 总收入 边际收入 平均收入
P Q TR MR AR
第 10章 Slide 10
平均收入和边际收入
Q0
1
2
3
P
1 2 3 4 5 6 7
4
5
6
7
平均收入 (需求 )
边际收入第 10章 Slide 11
完全垄断观察
1) 只有降价才能增加销售量
2) MR < P
3) 与完全竞争比较
不需要降价就能增加销售量
MR = P
第 10章 Slide 12
完全垄断完全垄断企业的产量决策当 MR = MC 时利润达到最大化
MRMCor
MRMCQCQRQ
QCQRQ
0///
)()()(
或第 10章 Slide 13
利润最大化当产量低于 MR = MC 时，收入的减少大于成本的减少 (MR > MC).
当产量高于 MR = MC 时，收入的增加小于成本的增加 (MR < MC)
完全垄断企业的产量决策第 10章 Slide 14
利润减少
P1
Q1
利润减少
MC
AC
Q
P
D = AR
MR
P*
Q*
利润最大化
P2
Q2
第 10章 Slide 15
完全垄断定价法则
可以将边际收入等于边际成本的原理转化为一个简单实用的法则
其过程可说明如下,
第 10章 Slide 16
定价法则
P
Q
Q
P
E
Q
P
P
Q
PP
Q
P
QPMR
Q
PQ
Q
R
MR
d
.3
.2
)(
.1
第 10章 Slide 17
定价法则
d
d
E
PPMR
EQ
P
P
Q
1
.5
1
.4
第 10章 Slide 18
定价法则
D
DD
E11
MC
P
EE
1
P P
MC MR @ m a x i m i z e d is
1
.6?
第 10章 Slide 19
= 边际成本加价在价格中所占比例
【 (P-MC)/P】dE
1.7?
定价法则
8,加价等于需求价格弹性的倒数。
第 10章 Slide 20
定价法则
12$
75.
9
4
1
1
9
94
1
1
9
,
P
MCE
A s s u m e
E
MC
P
d
d
假设：
第 10章 Slide 21
完全垄断完全垄断与完全竞争的价格比较,
完全垄断
P > MC
完全竞争
P = MC
第 10章 Slide 22
完全垄断完全垄断与完全竞争的价格比较,
需求价格弹性越大，价格越接近于边际成本第 10章 Slide 23
完全垄断需求变化
在完全竞争市场中,市场供给曲线由边际成本决定；
对于完全垄断企业,产量由边际成本和需求曲线共同决定；
第 10章 Slide 24
D2
MR2
D1
MR1
需求变动导致价格变动但产量不变
Q
MC
P
P2
P1
Q1= Q2
第 10章 Slide 25
D1
MR1
需求变动导致产量变动但价格不变
MC
P
MR2
D2P1 = P2
Q1 Q2 Q
第 10章 Slide 26
完全垄断观察
需求变化通常导致价格及需求量都发生变化；
完全垄断市场没有供给曲线；
第 10章 Slide 27
完全垄断观察
在相同价格水平下，完全垄断企业可能生产不同数量的产品；
在不同价格水平下，完全垄断企业可能生产相同数量的产品；
第 10章 Slide 28
Monopoly
The Effect of a Tax
Under monopoly price can sometimes rise
by more than the amount of the tax.
To determine the impact of a tax:
t = specific tax
MC = MC + t
MR = MC + t,optimal production decision
第 10章 Slide 29
Effect of Excise Tax on Monopolist
Quantity
$/Q
MC
D = AR
MR
Q0
P0 MC + tax
t
Q1
P1
P?
Increase in P,P0P1 > increase in tax
第 10章 Slide 30
Question
Suppose,Ed = -2
How much would the price change?
Effect of Excise Tax on Monopolist
第 10章 Slide 31
Answer
What would happen to profits?
t a x,t heby t w i c e i nc r e a s e s P r i c e
22)(2
t oi nc r e a s e s If
22If
11
tMCtMCP
tMCMC
MCPE
E
MC
P
d
d
Effect of Excise Tax on Monopolist
第 10章 Slide 32
Monopoly
The Multiplant Firm
For many firms,production takes place in
two or more different plants whose
operating cost can differ.
第 10章 Slide 33
Monopoly
The Multiplant Firm
Choosing total output and the output for
each plant:
The marginal cost in each plant should
be equal.
The marginal cost should equal the
marginal revenue for each plant.
第 10章 Slide 34
Monopoly
Algebraically:
21
22
11
O u t p u t To t a l
2P l an t f o r C o s t &O u t p u t &
1P l an t f o r C o s t &O u t p u t &
QQQ
CQ
CQ
T
The Multiplant Firm
第 10章 Slide 35
Monopoly
Algebraically:
0
)(
)()(
1
1
11
2211
Q
C
Q
PQ
Q
QCQCPQ
T
T
The Multiplant Firm
第 10章 Slide 36
Monopoly
Algebraically:
1
1
1
1
0)(
)(
)(
MCMR
Q
C
MC
Q
PQ
MR T
The Multiplant Firm
第 10章 Slide 37
Monopoly
Algebraically:
21
2
1
MCMCMR
MCMR
MCMR
第 10章 Slide 38
Production with Two Plants
Quantity
$/Q
D = AR
MR
MC1 MC2
MCT
MR*
Q1 Q2 Q3
P*
第 10章 Slide 39
Production with Two Plants
Observations:
1) MCT = MC1 +
MC2
2) Profit
maximizing output:
MCT = MR at QT and
P *
MR = MR*
MR* = MC1 at Q1,
MC* = MC2 at Q2
MC1 + MC2 = MCT,Q1
+ Q2 = QT,
and MR = MC1 + MC2
Quantity
$/Q
D = AR
MR
MC1 MC2
MCT
MR*
Q1 Q2 Q3
P*
第 10章 Slide 40
Monopoly Power
Monopoly is rare.
However,a market with several firms,each
facing a downward sloping demand curve will
produce so that price exceeds marginal cost.
第 10章 Slide 41
Monopoly Power
Scenario:
Four firms with equal share (5,000) of a
market for 20,000 toothbrushes at a price
of $1.50.
Quantity10,000
2.00
QA
$/Q $/Q
1.50
1.00
20,000 30,000 3,000 5,000 7,000
2.00
1.50
1.00
1.40
1.60
At a market price
of $1.50,elasticity of
demand is -1.5.
Market
Demand
The Demand for Toothbrushes
The demand curve for Firm A
depends on how much
their product differs,and
how the firms compete.
At a market price
of $1.50,elasticity of
demand is -1.5.
Quantity10,000
2.00
QA
$/Q $/Q
1.50
1.00
20,000 30,000 3,000 5,000 7,000
2.00
1.50
1.00
1.40
1.60
DA
MRA
Market
Demand
Firm A sees a much more
elastic demand curve due to
competition--Ed = -.6,Still
Firm A has some monopoly
power and charges a price
which exceeds MC.
MCA
The Demand for Toothbrushes
第 10章 Slide 44
Monopoly Power
Measuring Monopoly Power
In perfect competition,P = MR = MC
Monopoly power,P > MC
第 10章 Slide 45
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
第 10章 Slide 46
Monopoly Power
Monopoly power does not guarantee profits.
Profit depends on average cost relative to price.
Question:
Can you identify any difficulties in using the
Lerner Index (L) for public policy?
第 10章 Slide 47
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
dE
MC
P
11?
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.
第 10章 Slide 49
Markup Pricing:
Supermarkets to Designer Jeans
Supermarkets
M C,a b o v e 11%-10 about s e t P r ic e s
s t o r e s in d iv id u a l f o r 3.
p r o d u c t S im ila r 2.
f ir m s S e v e r a l 1.
.5
)(11.1
9.01.11
.4
10
MC
MCMC
P
E
d
第 10章 Slide 50
Convenience Stores
M C,a b o v e 25% about s e t P r ic e s
3.
t h e m a t e sd if f e r e n t i eC o n v e n ie n c 2.
tss u p e r m a r k e t h a n p r ic e s H ig h e r 1.
.5
)(25.1
8.0511
.4
5
MC
MCMC
P
E
d
Markup Pricing:
Supermarkets to Designer Jeans
第 10章 Slide 51
Convenience stores have more monopoly
power.
Question:
Do convenience stores have higher profits
than supermarkets?
Markup Pricing:
Supermarkets to Designer Jeans
Convenience Stores
第 10章 Slide 52
Designer jeans
Ed = -3 to -4
Price 33 - 50% > MC
MC = $12 - $18/pair
Wholesale price = $18 - $27
Markup Pricing:
Supermarkets to Designer Jeans
Designer Jeans
The Pricing of
Prerecorded Videocassettes
1985 1999
Title Retail Price($) Title Retail Price($)
Purple Rain $29.98 Austin Powers $10.49
Raiders of the Lost Ark 24.95 A Bug’s Life 17.99
Jane Fonda Workout 59.95 There’s Something
about Mary 13.99
The Empire Strikes Back 79.98 Tae-Bo Workout 24.47
An Officer and a Gentleman 24.95 Lethal Weapon 4 16.99
Star Trek,The Motion Picture 24.95 Men in Black 12.99
Star Wars 39.98 Armageddon 15.86
What Do You Think?
Should producers lower the price of
videocassettes to increase sales and
revenue?
The Pricing of
Prerecorded Videocassettes
第 10章 Slide 55
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.
第 10章 Slide 56
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
第 10章 Slide 57
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?
第 10章 Slide 58
BA
Lost Consumer Surplus
Deadweight
Loss
Because of the higher
price,consumers lose
A+B and producer
gains A-C.
C
Deadweight Loss from Monopoly Power
Quantity
AR
MR
MC
QC
PC
Pm
Qm
$/Q
第 10章 Slide 59
Rent Seeking
Firms may spend to gain monopoly power
Lobbying
Advertising
Building excess capacity
The Social Costs of Monopoly Power
第 10章 Slide 60
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
第 10章 Slide 61
Example
1996 Archer Daniels Midland (ADM)
successfully lobbied for regulations
requiring ethanol be produced from corn
Question
Why only corn?
The Social Costs of Monopoly Power
第 10章 Slide 62
Price Regulation
Recall that in competitive markets,price
regulation created a deadweight loss.
Question:
What about a monopoly?
The Social Costs of Monopoly Power
第 10章 Slide 63
AR
MR
MCPm
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 outputdecreases 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
第 10章 Slide 64
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
第 10章 Slide 65
Regulating the Price
of a Natural Monopoly
$/Q
Natural monopolies occur
because of extensive
economies of scale
Quantity
第 10章 Slide 66
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
第 10章 Slide 67
Regulation in Practice
It is very difficult to estimate the firm's cost
and demand functions because they
change with evolving market conditions
The Social Costs of Monopoly Power
第 10章 Slide 68
Regulation in Practice
An alternative pricing technique---rate-of-return
regulation allows the firms to set a maximum price
based on the expected rate or return that the firm
will earn.
P = AVC + (D + T + sK)/Q,where
P = price,AVC = average variable cost
D = depreciation,T = taxes
s = allowed rate of return,K = firm’s capital stock
The Social Costs of Monopoly Power
第 10章 Slide 69
Regulation in Practice
Using this technique requires hearings to
arrive at the respective figures.
The hearing process creates a regulatory
lag that may benefit producers (1950s &
60s) or consumers (1970s & 80s).
Question
Who is benefiting in the 1990s?
The Social Costs of Monopoly Power
第 10章 Slide 70
Monopsony
A monopsony is a market in which there is a
single buyer.
An oligopsony is a market with only a few
buyers.
Monopsony power is the ability of the buyer to
affect the price of the good and pay less than
the price that would exist in a competitive
market.
第 10章 Slide 71
Monopsony
Competitive Buyer
Price taker
P = Marginal expenditure = Average
expenditure
D = Marginal value
Competitive Buyer
Compared to Competitive Seller
Quantity Quantity
$/Q $/Q
AR = MR
D = MV
ME = AE
P*
Q*
ME = MV at Q*
ME = P*
P* = MV
P*
Q*
MC
MR = MC
P* = MR
P* = MC
Buyer Seller
第 10章 Slide 73
ME
S = AE
The market supply curve is the monopsonist’s
average expenditure curve
Monopsonist Buyer
Quantity
$/Q
MV
Q*m
P*m
Monopsony
ME > P & above S
PC
QC
Competitive
P = PC
Q = Q+C
第 10章 Slide 74
Monopoly and Monopsony
Quantity
AR
MR
MC
$/Q
QC
PC
Monopoly
Note,MR = MC;
AR > MC; P > MC
P*
Q*
第 10章 Slide 75
Monopoly and Monopsony
Quantity
$/Q
MV
ME
S = AE
Q*
P*
PC
QC
Monopsony
Note,ME = MV;
ME > AE; MV > P
第 10章 Slide 76
Monopoly and Monopsony
Monopoly
MR < P
P > MC
Qm < QC
Pm > PC
Monopsony
ME > P
P < MV
Qm < QC
Pm < PC
第 10章 Slide 77
Monopsony Power
A few buyers can influence price (e.g,
automobile industry).
Monopsony power gives them the ability to pay
a price that is less than marginal value,
第 10章 Slide 78
Monopsony Power
The degree of monopsony power depends on
three similar factors.
1) Elasticity of market supply
The less elastic the market supply,the
greater the monopsony power.
第 10章 Slide 79
Monopsony Power
The degree of monopsony power depends on
three similar factors.
2) Number of buyers
The fewer the number of buyers,the less
elastic the supply and the greater the
monopsony power.
第 10章 Slide 80
Monopsony Power
The degree of monopsony power depends on
three similar factors.
3) Interaction Among Buyers
The less the buyers compete,the greater
the monopsony power.
ME
S = AE
ME
S = AE
Monopsony Power:
Elastic versus Inelastic Supply
Quantity Quantity
$/Q $/Q
MV MV
Q*
P*
MV - P*
P*
Q*
MV - P*
第 10章 Slide 82
A
Deadweight Loss from
Monopsony Power
Determining the
deadweight loss in
monopsony
Change in seller’s
surplus = -A-C
Change in buyer’s
surplus = A - B
Change in welfare =
-A - C + A - B = -C - B
Inefficiency occurs
because less is purchased
Quantity
$/Q
MV
ME
S = AE
Q*
P*
PC
QC
B
C
Deadweight Loss
第 10章 Slide 83
Monopsony Power
Bilateral Monopoly
Bilateral monopoly is rare,however,
markets with a small number of sellers with
monopoly power selling to a market with
few buyers with monopsony power is more
common.
The Social Costs of Monopsony Power
第 10章 Slide 84
Monopsony Power
Question
In this case,what is likely to happen to
price?
The Social Costs of Monopsony Power
第 10章 Slide 85
Limiting Market Power,
The Antitrust Laws
Antitrust Laws:
Promote a competitive economy
Rules and regulations designed to promote
a competitive economy by:
Prohibiting actions that restrain or are
likely to restrain competition
Restricting the forms of market
structures that are allowable
第 10章 Slide 86
Sherman Act (1890)
Section 1
Prohibits contracts,combinations,or
conspiracies in restraint of trade
Explicit agreement to restrict output or fix
prices
Implicit collusion through parallel conduct
Limiting Market Power,
The Antitrust Laws
第 10章 Slide 87
1983
Six companies and six executives indicted
for price of copper tubing
1996
Archer Daniels Midland (ADM) pleaded
guilty to price fixing for lysine -- three
sentenced to prison in 1999
Limiting Market Power,
The Antitrust Laws
Examples of Illegal Combinations
第 10章 Slide 88
1999
Roche A.G.,BASF A.G.,Rhone-Poulenc
and Takeda pleaded guilty to price fixing of
vitamins -- fined more than $1 billion.
Limiting Market Power,
The Antitrust Laws
Examples of Illegal Combinations
第 10章 Slide 89
Sherman Act (1890)
Section 2
Makes it illegal to monopolize or
attempt to monopolize a market and
prohibits conspiracies that result in
monopolization,
Limiting Market Power,
The Antitrust Laws
第 10章 Slide 90
Clayton Act (1914)
1) Makes it unlawful to require a buyer
or lessor not to buy from a
competitor
2) Prohibits predatory pricing
Limiting Market Power,
The Antitrust Laws
第 10章 Slide 91
Clayton Act (1914)
3) Prohibits mergers and acquisitions if
they,substantially lessen
competition” or,tend to create a
monopoly”
Limiting Market Power,
The Antitrust Laws
第 10章 Slide 92
Robinson-Patman Act (1936)
Prohibits price discrimination if it is likely to
injure the competition
Limiting Market Power,
The Antitrust Laws
第 10章 Slide 93
Federal Trade Commission Act (1914,
amended 1938,1973,1975)
1) Created the Federal Trade
Commission (FTC)
2) Prohibitions against deceptive
advertising,labeling,agreements
with retailer to exclude competing
brands
Limiting Market Power,
The Antitrust Laws
第 10章 Slide 94
Antitrust laws are enforced three ways:
1) Antitrust Division of the Department
of Justice
A part of the executive branch--the
administration can influence
enforcement
Fines levied on businesses; fines and
imprisonment levied on individuals
Limiting Market Power,
The Antitrust Laws
第 10章 Slide 95
Antitrust laws are enforced three ways:
2) Federal Trade Commission
Enforces through voluntary
understanding or formal commission
order
Limiting Market Power,
The Antitrust Laws
第 10章 Slide 96
Antitrust laws are enforced three ways:
3) Private Proceedings
Lawsuits for damages
Plaintiff can receive treble damages
Limiting Market Power,
The Antitrust Laws
第 10章 Slide 97
Two Examples
American Airlines -- Price fixing
Microsoft
Monopoly power
Predatory actions
Collusion
Limiting Market Power,
The Antitrust Laws
第 10章 Slide 98
Summary
Market power is the ability of sellers or buyers
to affect the price of a good.
Market power can be in two forms,monopoly
power and monopsony power.
第 10章 Slide 99
Summary
Monopoly power is determined in part by the
number of firms competing in the market.
Monopsony power is determined in part by the
number of buyers in the market.
第 10章 Slide 100
Summary
Market power can impose costs on society.
Sometimes,scale economies make pure
monopoly desirable.
We rely on the antitrust laws to prevent firms
from obtaining excessive market power.
End of Chapter 10
Market Power:
Monopoly and
Monopsony
垄断与买方垄断第 10章 Slide 2
本章要讨论的问题垄断垄断势力垄断形成原因垄断的社会成本第 10章 Slide 3
本章要讨论的问题买方垄断买方垄断势力限制市场势力,反垄断法第 10章 Slide 4
完全竞争完全竞争回顾
P = LMC = LRAC
长期内只存在正常利润或经济利润为零
大量生产者和消费者
同质化产品
充分信息
企业是价格的接受者完全竞争
Q Q
P P市场 单个企业
D S
Q0
P0 P0
D = MR = P
q0
LRACLMC
第 10章 Slide 6
完全垄断完全垄断
1) 一个生产者 – 许多消费者
2) 一种产品 (没有替代品 )
3) 市场进入壁垒第 10章 Slide 7
完全垄断完全垄断企业是市场供给方，对其产品的销售能够绝对控制。
当边际收入等于边际成本时，利润达到最大。
第 10章 Slide 8
完全垄断确定边际收入
作为唯一的生产者,垄断企业面对整个市场
假定企业的需求为,
P = 6 - Q
第 10章 Slide 9
总收入、边际收入及平均收入
$6 0 $0 --- ---
5 1 5 $5 $5
4 2 8 3 4
3 3 9 1 3
2 4 8 -1 2
1 5 5 -3 1
价格 数量 总收入 边际收入 平均收入
P Q TR MR AR
第 10章 Slide 10
平均收入和边际收入
Q0
1
2
3
P
1 2 3 4 5 6 7
4
5
6
7
平均收入 (需求 )
边际收入第 10章 Slide 11
完全垄断观察
1) 只有降价才能增加销售量
2) MR < P
3) 与完全竞争比较
不需要降价就能增加销售量
MR = P
第 10章 Slide 12
完全垄断完全垄断企业的产量决策当 MR = MC 时利润达到最大化
MRMCor
MRMCQCQRQ
QCQRQ
0///
)()()(
或第 10章 Slide 13
利润最大化当产量低于 MR = MC 时，收入的减少大于成本的减少 (MR > MC).
当产量高于 MR = MC 时，收入的增加小于成本的增加 (MR < MC)
完全垄断企业的产量决策第 10章 Slide 14
利润减少
P1
Q1
利润减少
MC
AC
Q
P
D = AR
MR
P*
Q*
利润最大化
P2
Q2
第 10章 Slide 15
完全垄断定价法则
可以将边际收入等于边际成本的原理转化为一个简单实用的法则
其过程可说明如下,
第 10章 Slide 16
定价法则
P
Q
Q
P
E
Q
P
P
Q
PP
Q
P
QPMR
Q
PQ
Q
R
MR
d
.3
.2
)(
.1
第 10章 Slide 17
定价法则
d
d
E
PPMR
EQ
P
P
Q
1
.5
1
.4
第 10章 Slide 18
定价法则
D
DD
E11
MC
P
EE
1
P P
MC MR @ m a x i m i z e d is
1
.6?
第 10章 Slide 19
= 边际成本加价在价格中所占比例
【 (P-MC)/P】dE
1.7?
定价法则
8,加价等于需求价格弹性的倒数。
第 10章 Slide 20
定价法则
12$
75.
9
4
1
1
9
94
1
1
9
,
P
MCE
A s s u m e
E
MC
P
d
d
假设：
第 10章 Slide 21
完全垄断完全垄断与完全竞争的价格比较,
完全垄断
P > MC
完全竞争
P = MC
第 10章 Slide 22
完全垄断完全垄断与完全竞争的价格比较,
需求价格弹性越大，价格越接近于边际成本第 10章 Slide 23
完全垄断需求变化
在完全竞争市场中,市场供给曲线由边际成本决定；
对于完全垄断企业,产量由边际成本和需求曲线共同决定；
第 10章 Slide 24
D2
MR2
D1
MR1
需求变动导致价格变动但产量不变
Q
MC
P
P2
P1
Q1= Q2
第 10章 Slide 25
D1
MR1
需求变动导致产量变动但价格不变
MC
P
MR2
D2P1 = P2
Q1 Q2 Q
第 10章 Slide 26
完全垄断观察
需求变化通常导致价格及需求量都发生变化；
完全垄断市场没有供给曲线；
第 10章 Slide 27
完全垄断观察
在相同价格水平下，完全垄断企业可能生产不同数量的产品；
在不同价格水平下，完全垄断企业可能生产相同数量的产品；
第 10章 Slide 28
Monopoly
The Effect of a Tax
Under monopoly price can sometimes rise
by more than the amount of the tax.
To determine the impact of a tax:
t = specific tax
MC = MC + t
MR = MC + t,optimal production decision
第 10章 Slide 29
Effect of Excise Tax on Monopolist
Quantity
$/Q
MC
D = AR
MR
Q0
P0 MC + tax
t
Q1
P1
P?
Increase in P,P0P1 > increase in tax
第 10章 Slide 30
Question
Suppose,Ed = -2
How much would the price change?
Effect of Excise Tax on Monopolist
第 10章 Slide 31
Answer
What would happen to profits?
t a x,t heby t w i c e i nc r e a s e s P r i c e
22)(2
t oi nc r e a s e s If
22If
11
tMCtMCP
tMCMC
MCPE
E
MC
P
d
d
Effect of Excise Tax on Monopolist
第 10章 Slide 32
Monopoly
The Multiplant Firm
For many firms,production takes place in
two or more different plants whose
operating cost can differ.
第 10章 Slide 33
Monopoly
The Multiplant Firm
Choosing total output and the output for
each plant:
The marginal cost in each plant should
be equal.
The marginal cost should equal the
marginal revenue for each plant.
第 10章 Slide 34
Monopoly
Algebraically:
21
22
11
O u t p u t To t a l
2P l an t f o r C o s t &O u t p u t &
1P l an t f o r C o s t &O u t p u t &
QQQ
CQ
CQ
T
The Multiplant Firm
第 10章 Slide 35
Monopoly
Algebraically:
0
)(
)()(
1
1
11
2211
Q
C
Q
PQ
Q
QCQCPQ
T
T
The Multiplant Firm
第 10章 Slide 36
Monopoly
Algebraically:
1
1
1
1
0)(
)(
)(
MCMR
Q
C
MC
Q
PQ
MR T
The Multiplant Firm
第 10章 Slide 37
Monopoly
Algebraically:
21
2
1
MCMCMR
MCMR
MCMR
第 10章 Slide 38
Production with Two Plants
Quantity
$/Q
D = AR
MR
MC1 MC2
MCT
MR*
Q1 Q2 Q3
P*
第 10章 Slide 39
Production with Two Plants
Observations:
1) MCT = MC1 +
MC2
2) Profit
maximizing output:
MCT = MR at QT and
P *
MR = MR*
MR* = MC1 at Q1,
MC* = MC2 at Q2
MC1 + MC2 = MCT,Q1
+ Q2 = QT,
and MR = MC1 + MC2
Quantity
$/Q
D = AR
MR
MC1 MC2
MCT
MR*
Q1 Q2 Q3
P*
第 10章 Slide 40
Monopoly Power
Monopoly is rare.
However,a market with several firms,each
facing a downward sloping demand curve will
produce so that price exceeds marginal cost.
第 10章 Slide 41
Monopoly Power
Scenario:
Four firms with equal share (5,000) of a
market for 20,000 toothbrushes at a price
of $1.50.
Quantity10,000
2.00
QA
$/Q $/Q
1.50
1.00
20,000 30,000 3,000 5,000 7,000
2.00
1.50
1.00
1.40
1.60
At a market price
of $1.50,elasticity of
demand is -1.5.
Market
Demand
The Demand for Toothbrushes
The demand curve for Firm A
depends on how much
their product differs,and
how the firms compete.
At a market price
of $1.50,elasticity of
demand is -1.5.
Quantity10,000
2.00
QA
$/Q $/Q
1.50
1.00
20,000 30,000 3,000 5,000 7,000
2.00
1.50
1.00
1.40
1.60
DA
MRA
Market
Demand
Firm A sees a much more
elastic demand curve due to
competition--Ed = -.6,Still
Firm A has some monopoly
power and charges a price
which exceeds MC.
MCA
The Demand for Toothbrushes
第 10章 Slide 44
Monopoly Power
Measuring Monopoly Power
In perfect competition,P = MR = MC
Monopoly power,P > MC
第 10章 Slide 45
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
第 10章 Slide 46
Monopoly Power
Monopoly power does not guarantee profits.
Profit depends on average cost relative to price.
Question:
Can you identify any difficulties in using the
Lerner Index (L) for public policy?
第 10章 Slide 47
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
dE
MC
P
11?
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.
第 10章 Slide 49
Markup Pricing:
Supermarkets to Designer Jeans
Supermarkets
M C,a b o v e 11%-10 about s e t P r ic e s
s t o r e s in d iv id u a l f o r 3.
p r o d u c t S im ila r 2.
f ir m s S e v e r a l 1.
.5
)(11.1
9.01.11
.4
10
MC
MCMC
P
E
d
第 10章 Slide 50
Convenience Stores
M C,a b o v e 25% about s e t P r ic e s
3.
t h e m a t e sd if f e r e n t i eC o n v e n ie n c 2.
tss u p e r m a r k e t h a n p r ic e s H ig h e r 1.
.5
)(25.1
8.0511
.4
5
MC
MCMC
P
E
d
Markup Pricing:
Supermarkets to Designer Jeans
第 10章 Slide 51
Convenience stores have more monopoly
power.
Question:
Do convenience stores have higher profits
than supermarkets?
Markup Pricing:
Supermarkets to Designer Jeans
Convenience Stores
第 10章 Slide 52
Designer jeans
Ed = -3 to -4
Price 33 - 50% > MC
MC = $12 - $18/pair
Wholesale price = $18 - $27
Markup Pricing:
Supermarkets to Designer Jeans
Designer Jeans
The Pricing of
Prerecorded Videocassettes
1985 1999
Title Retail Price($) Title Retail Price($)
Purple Rain $29.98 Austin Powers $10.49
Raiders of the Lost Ark 24.95 A Bug’s Life 17.99
Jane Fonda Workout 59.95 There’s Something
about Mary 13.99
The Empire Strikes Back 79.98 Tae-Bo Workout 24.47
An Officer and a Gentleman 24.95 Lethal Weapon 4 16.99
Star Trek,The Motion Picture 24.95 Men in Black 12.99
Star Wars 39.98 Armageddon 15.86
What Do You Think?
Should producers lower the price of
videocassettes to increase sales and
revenue?
The Pricing of
Prerecorded Videocassettes
第 10章 Slide 55
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.
第 10章 Slide 56
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
第 10章 Slide 57
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?
第 10章 Slide 58
BA
Lost Consumer Surplus
Deadweight
Loss
Because of the higher
price,consumers lose
A+B and producer
gains A-C.
C
Deadweight Loss from Monopoly Power
Quantity
AR
MR
MC
QC
PC
Pm
Qm
$/Q
第 10章 Slide 59
Rent Seeking
Firms may spend to gain monopoly power
Lobbying
Advertising
Building excess capacity
The Social Costs of Monopoly Power
第 10章 Slide 60
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
第 10章 Slide 61
Example
1996 Archer Daniels Midland (ADM)
successfully lobbied for regulations
requiring ethanol be produced from corn
Question
Why only corn?
The Social Costs of Monopoly Power
第 10章 Slide 62
Price Regulation
Recall that in competitive markets,price
regulation created a deadweight loss.
Question:
What about a monopoly?
The Social Costs of Monopoly Power
第 10章 Slide 63
AR
MR
MCPm
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 outputdecreases 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
第 10章 Slide 64
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
第 10章 Slide 65
Regulating the Price
of a Natural Monopoly
$/Q
Natural monopolies occur
because of extensive
economies of scale
Quantity
第 10章 Slide 66
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
第 10章 Slide 67
Regulation in Practice
It is very difficult to estimate the firm's cost
and demand functions because they
change with evolving market conditions
The Social Costs of Monopoly Power
第 10章 Slide 68
Regulation in Practice
An alternative pricing technique---rate-of-return
regulation allows the firms to set a maximum price
based on the expected rate or return that the firm
will earn.
P = AVC + (D + T + sK)/Q,where
P = price,AVC = average variable cost
D = depreciation,T = taxes
s = allowed rate of return,K = firm’s capital stock
The Social Costs of Monopoly Power
第 10章 Slide 69
Regulation in Practice
Using this technique requires hearings to
arrive at the respective figures.
The hearing process creates a regulatory
lag that may benefit producers (1950s &
60s) or consumers (1970s & 80s).
Question
Who is benefiting in the 1990s?
The Social Costs of Monopoly Power
第 10章 Slide 70
Monopsony
A monopsony is a market in which there is a
single buyer.
An oligopsony is a market with only a few
buyers.
Monopsony power is the ability of the buyer to
affect the price of the good and pay less than
the price that would exist in a competitive
market.
第 10章 Slide 71
Monopsony
Competitive Buyer
Price taker
P = Marginal expenditure = Average
expenditure
D = Marginal value
Competitive Buyer
Compared to Competitive Seller
Quantity Quantity
$/Q $/Q
AR = MR
D = MV
ME = AE
P*
Q*
ME = MV at Q*
ME = P*
P* = MV
P*
Q*
MC
MR = MC
P* = MR
P* = MC
Buyer Seller
第 10章 Slide 73
ME
S = AE
The market supply curve is the monopsonist’s
average expenditure curve
Monopsonist Buyer
Quantity
$/Q
MV
Q*m
P*m
Monopsony
ME > P & above S
PC
QC
Competitive
P = PC
Q = Q+C
第 10章 Slide 74
Monopoly and Monopsony
Quantity
AR
MR
MC
$/Q
QC
PC
Monopoly
Note,MR = MC;
AR > MC; P > MC
P*
Q*
第 10章 Slide 75
Monopoly and Monopsony
Quantity
$/Q
MV
ME
S = AE
Q*
P*
PC
QC
Monopsony
Note,ME = MV;
ME > AE; MV > P
第 10章 Slide 76
Monopoly and Monopsony
Monopoly
MR < P
P > MC
Qm < QC
Pm > PC
Monopsony
ME > P
P < MV
Qm < QC
Pm < PC
第 10章 Slide 77
Monopsony Power
A few buyers can influence price (e.g,
automobile industry).
Monopsony power gives them the ability to pay
a price that is less than marginal value,
第 10章 Slide 78
Monopsony Power
The degree of monopsony power depends on
three similar factors.
1) Elasticity of market supply
The less elastic the market supply,the
greater the monopsony power.
第 10章 Slide 79
Monopsony Power
The degree of monopsony power depends on
three similar factors.
2) Number of buyers
The fewer the number of buyers,the less
elastic the supply and the greater the
monopsony power.
第 10章 Slide 80
Monopsony Power
The degree of monopsony power depends on
three similar factors.
3) Interaction Among Buyers
The less the buyers compete,the greater
the monopsony power.
ME
S = AE
ME
S = AE
Monopsony Power:
Elastic versus Inelastic Supply
Quantity Quantity
$/Q $/Q
MV MV
Q*
P*
MV - P*
P*
Q*
MV - P*
第 10章 Slide 82
A
Deadweight Loss from
Monopsony Power
Determining the
deadweight loss in
monopsony
Change in seller’s
surplus = -A-C
Change in buyer’s
surplus = A - B
Change in welfare =
-A - C + A - B = -C - B
Inefficiency occurs
because less is purchased
Quantity
$/Q
MV
ME
S = AE
Q*
P*
PC
QC
B
C
Deadweight Loss
第 10章 Slide 83
Monopsony Power
Bilateral Monopoly
Bilateral monopoly is rare,however,
markets with a small number of sellers with
monopoly power selling to a market with
few buyers with monopsony power is more
common.
The Social Costs of Monopsony Power
第 10章 Slide 84
Monopsony Power
Question
In this case,what is likely to happen to
price?
The Social Costs of Monopsony Power
第 10章 Slide 85
Limiting Market Power,
The Antitrust Laws
Antitrust Laws:
Promote a competitive economy
Rules and regulations designed to promote
a competitive economy by:
Prohibiting actions that restrain or are
likely to restrain competition
Restricting the forms of market
structures that are allowable
第 10章 Slide 86
Sherman Act (1890)
Section 1
Prohibits contracts,combinations,or
conspiracies in restraint of trade
Explicit agreement to restrict output or fix
prices
Implicit collusion through parallel conduct
Limiting Market Power,
The Antitrust Laws
第 10章 Slide 87
1983
Six companies and six executives indicted
for price of copper tubing
1996
Archer Daniels Midland (ADM) pleaded
guilty to price fixing for lysine -- three
sentenced to prison in 1999
Limiting Market Power,
The Antitrust Laws
Examples of Illegal Combinations
第 10章 Slide 88
1999
Roche A.G.,BASF A.G.,Rhone-Poulenc
and Takeda pleaded guilty to price fixing of
vitamins -- fined more than $1 billion.
Limiting Market Power,
The Antitrust Laws
Examples of Illegal Combinations
第 10章 Slide 89
Sherman Act (1890)
Section 2
Makes it illegal to monopolize or
attempt to monopolize a market and
prohibits conspiracies that result in
monopolization,
Limiting Market Power,
The Antitrust Laws
第 10章 Slide 90
Clayton Act (1914)
1) Makes it unlawful to require a buyer
or lessor not to buy from a
competitor
2) Prohibits predatory pricing
Limiting Market Power,
The Antitrust Laws
第 10章 Slide 91
Clayton Act (1914)
3) Prohibits mergers and acquisitions if
they,substantially lessen
competition” or,tend to create a
monopoly”
Limiting Market Power,
The Antitrust Laws
第 10章 Slide 92
Robinson-Patman Act (1936)
Prohibits price discrimination if it is likely to
injure the competition
Limiting Market Power,
The Antitrust Laws
第 10章 Slide 93
Federal Trade Commission Act (1914,
amended 1938,1973,1975)
1) Created the Federal Trade
Commission (FTC)
2) Prohibitions against deceptive
advertising,labeling,agreements
with retailer to exclude competing
brands
Limiting Market Power,
The Antitrust Laws
第 10章 Slide 94
Antitrust laws are enforced three ways:
1) Antitrust Division of the Department
of Justice
A part of the executive branch--the
administration can influence
enforcement
Fines levied on businesses; fines and
imprisonment levied on individuals
Limiting Market Power,
The Antitrust Laws
第 10章 Slide 95
Antitrust laws are enforced three ways:
2) Federal Trade Commission
Enforces through voluntary
understanding or formal commission
order
Limiting Market Power,
The Antitrust Laws
第 10章 Slide 96
Antitrust laws are enforced three ways:
3) Private Proceedings
Lawsuits for damages
Plaintiff can receive treble damages
Limiting Market Power,
The Antitrust Laws
第 10章 Slide 97
Two Examples
American Airlines -- Price fixing
Microsoft
Monopoly power
Predatory actions
Collusion
Limiting Market Power,
The Antitrust Laws
第 10章 Slide 98
Summary
Market power is the ability of sellers or buyers
to affect the price of a good.
Market power can be in two forms,monopoly
power and monopsony power.
第 10章 Slide 99
Summary
Monopoly power is determined in part by the
number of firms competing in the market.
Monopsony power is determined in part by the
number of buyers in the market.
第 10章 Slide 100
Summary
Market power can impose costs on society.
Sometimes,scale economies make pure
monopoly desirable.
We rely on the antitrust laws to prevent firms
from obtaining excessive market power.
End of Chapter 10
Market Power:
Monopoly and
Monopsony
