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Monopoly , Oligopoly andMonopolistic Competition
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Framework for Competition Analysis
Policy context and market environment:Govt Policy on Competition
Degree of govt ownership
Regulation
Trade policy
Size of domestic market
Vested interests
Technological Innovations
Competition authority
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Framework contd
Degree of competition:
Number of market players
Market concentration
Profitability
Entry and exit
Anti-competitive practices
Changes in market share (Brand Switching)
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Framework contd
Market outcomes:
Price
Competitiveness
Exports
Access to services
InnovationDomestic vs. foreign producers
Productivity Improvement
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A monopoly is a firm that is the sole seller of aproduct without close substitutes.
A monopoly firm has market power, the ability
to influence the market price of the product it
sells. A competitive firm has no market power.
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Why Monopolies Arise
The main cause of monopolies isb
arriersto entry other firms cannot enter the market.
Four sources of barriers to entry:
1. A single firm owns a key resource.E.g., DeBeers owns most of the worlds
diamond mines
2. The govt gives a single firm the exclusive right
to produce the good.
E.g., Indian Railways
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Why Monopolies Arise
3. Natural monopoly: a single firm can producethe entire market Qat lowerATC than could
several firms. Eg: Utilities
4. Coercive Monopoly: prohibits competitors from
entering the field: DeBeers controlled thedistribution channel till 2000 along with hoarding
to remove competition., Microsoft tying in of
Internet Explorer with OS
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Q
Cost
ATC
1000
`50
Example: 1000 homes need electricity.
ElectricityEconomies of
scale due tohuge FC
ATC is lower ifone firm services
all 1000 homesthan if two firmseach service500 homes. 500
`80
Natural monopoly:
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Monopoly vs. Competition: Demand Curves
In a competitive market,the market demand curve
slopes downward.
but the demand curve
for any individual firmsproduct is horizontal
at the market price.
The firm can increase Q
without lowering P,
so MR=P for the
competitive firm.
D
P
Q
A competitive firmsdemand curve
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Monopoly vs. Competition: Demand Curves
A monopolist is the onlyseller, so it faces the
market demand curve.
To sell a largerQ,
the firm must reduce P.
Thus,MRP.
D
P
Q
A monopolistsdemand curve
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Understanding the Monopolists MR
Increasing Qhas two effects on revenue:
The output effect:More output is sold, which raises revenue
Theprice effect:
The price falls, which lowers revenue To sell a largerQ, the monopolist must reduce the
price on all the units it sells.
Hence,MR
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Profit-Maximization
Like a competitive firm, a monopolist maximizesprofit by producing the quantity where MR=MC.
Once the monopolist identifies this quantity,
it sets the highest price consumers are willing to
pay for that quantity.
It finds this price from the D curve.
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Profit-Maximization
1. The profit-
maximizing Q
is where
MR=MC.
2. Find P from
the demand
curve at this Q.
Quantity
Costs andRevenue
MR
D
MC
Profit-maximizing output
P
Q
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The Monopolists Profit
As with a
competitive firm,the monopolists
profit equals
(P ATC) x Q
Quantity
Costs andRevenue
ATC
D
MR
MC
Q
P
ATC
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A Monopoly Does Not Have an S Curve
A competitive firm
takes Pas given
has a supply curve that shows how its Qdepends
on P
A monopoly firm
is a price-maker, not a price-taker
Qdoes not depend on P;
rather,Qand Pare jointly determined byMC,MR, and the demand curve.
So there is no supply curve for monopoly.
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Monopoly Drugs vs. Generic Drugs
Patents on new drugsgive a temporary
monopoly to the seller.
When thepatent expires,
the market
becomes competitive,
generics appear.
MC
Quantity
Price
D
MR
PM
QM
PC =
QC
The market fora typical drug
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The Welfare Cost of Monopoly
Recall: In a competitive market equilibrium,P=MCand total surplus is maximized.
In the monopoly eqm, P>MR=MC
The value to buyers of an additional unit (P)exceeds the cost of the resources needed toproduce that unit (MC).
The monopoly Qis too low
could increase total surplus with a largerQ. Thus, monopoly results in a deadweight loss orallocative inefficiency.
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P= MC
Deadweightloss
P
MC
The Welfare Cost of Monopoly
Competitive eqm:quantity =QE
P=MC
total surplus is
maximized
Monopoly eqm:
quantity =QM
P>MC
Quantity
Price
D
MR
MC
QM QE
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Price Discrimination
Price discrimination is the business practice ofselling the same good at different prices to
different buyers.
The characteristic used in price discrimination
is willingness to pay (WTP):
A firm can increase profit by charging a higherprice to buyers with higher WTP.
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Consumersurplus
Deadweightloss
Monopolyprofit
Perfect Price Discrimination vs.Single Price Monopoly
Here, the monopolistcharges the same
price (PM) to all
buyers.
A deadweight loss
results. MC
Quantity
Price
D
MR
PM
QM
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Monopolyprofit
Perfect Price Discrimination vs.Single Price Monopoly
Here, the monopolistproduces the
competitive quantity,
but charges each
buyer his or her WTP.This is called perfect
price discrimination.
The monopolist
captures all CSas profit.
But theres no DWL.
MC
Quantity
Price
D
MR
Q
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Price Discrimination in the Real World
In the real world, perfect price discrimination isnot possible:
no firm knows every buyers WTP buyers do not announce it to sellers
So, firms divide customers into groups
based on some observable trait
that is likely related to WTP, such as age.
Market Segmentation
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Observations
In the real world,
pure monopoly is rare. Yet, many firms have market power, due to
selling a unique variety of a product
having a large market share and few significantcompetitors
In many such cases, most of the ideas we have
seen here apply, including
markup of price over marginal cost deadweight loss
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Between Monopoly and Competition
Two extremes
Competitive markets: many firms, identicalproducts
Monopoly: one firm
In between these extremes
Oligopoly: only a few sellers offer similar oridentical products.
Monopolistic competition: many firms sellsimilar but not identical products.
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Measuring Market Concentration
Concentration ratio: the percentage of the
markets total output supplied by its four largest
firms ( or eight firms)
The higher the concentration ratio, lesser the
competition. Tentatively we can say:
0 % - Perfect competition
100 % - Oligopoly to Monopoly
0 50 % Monopolistic competition or Oligopoly
50 80 % - Oligopoly
An alternative method is HHI orHerfindahl Hirschman Index
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Industry >> General >> FactSheet
Industry - Steel - Large
Year End Sales Share Cum
1 S A I L 201003 40,520.24 30.33245 30
2 Tata Steel 201003 24,940.85 18.6701 493 JSW Steel 201003 18,202.48 13.62593 63
4 Ispat Inds. 201006 10,132.73 7.585111 70
5 Jindal Saw 201003 6,777.46 5.073439 75
6 JSL Stain. 201003 5,721.23 4.282771 80
7 Bhushan Steel 201003 5,611.27 4.200458 84
8 Uttam Galva 201003 4,495.66 3.36534 87
9 Lloyd Steel Inds 201003 2,898.72 2.16991 8910 Natl. Steel&Agro 201003 2,232.10 1.670895 91
11 Ramsarup Inds. 201003 2,056.95 1.539782 93
12 Mukand 201003 1,962.95 1.469416 94
13 Usha Martin 201003 1,850.39 1.385156 95
14 Surya Roshni 201003 1,777.90 1.330892 97
15 Sunflag Iron 201003 1,348.06 1.009124 98
16 ISMT 201003 1,193.27 0.893252 9917 M U S C O 201003 1,086.77 0.813529 99
18 Shah Alloys 201003 778.07 0.582444 100
133,587.10 100
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P Q
`0 140
5 130
10 120
15 11020 100
25 90
30 80
35 70
40 60
45 50
EXAMPLE: Cell Phone Duopoly in Smalltown
Smalltown has 140 residents
The good:
cell phone service with unlimited
anytime minutes and free phone
Smalltowns demand schedule
Two firms: Cingular, bRural
(duopoly: an oligopoly with two firms)
Each firms costs: FC= `0,MC= `10
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5045
6040
7035
8030
9025
1002011015
12010
1305
140`0
QP
1,750
1,800
1,750
1,600
1,350
1,000550
0
650
1,400
Profit
500
600
700
800
900
1,0001,100
1,200
1,300
`1,400
Cost
2,250
2,400
2,450
2,400
2,250
2,0001,650
1,200
650
`0
Revenue
EXAMPLE: Cell Phone Duopoly in Smalltown
Competitive
outcome:
P=MC=`10
Q= 120
Profit =`0
Competitive
outcome:
P=MC=`10
Q= 120
Profit =`0
Monopolyoutcome:
P=`40
Q=60
Profit =`1,800
Monopolyoutcome:
P=`40
Q=60
Profit =`1,800
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EXAMPLE: Cell Phone Duopoly in Smalltown
One possible duopoly outcome: collusion
Collusion: an agreement among firms in a
market about quantities to produce or prices to
charge
Cingular and bRural could agree to each producehalf of the monopoly output:
For each firm: Q=30,P=`40, profits =`900
Cartel: a group of firms acting in unison,e.g., Cingular and bRural in the outcome with
collusion
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"cartel" includes an association of producers,
sellers, distributors, traders or service providers
who, by agreement amongst themselves, limit,
control or attempt to control the production,
distribution, sale or price of, or, trade in goods orprovision of services;
(Competition Act 2002)
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DRAM Price Fixing:
Samsung is the third major semiconductor
company, after the Korean manufacturerHynixSemiconductor Inc. and the German
manufacturer Infineon Technologies AG, to
agree to plead guilty to fixing DRAM prices.
--US Dept of Justice
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Our competitors are our friends, our customers
are the enemy is an actual statement made by
an executive of Archer Daniel Midland, in the
famous case of the lysine (a feed additive)
cartel, which was caught on videotape by theFBI.
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Collusion vs. Self-Interest
Both firms would be better off if both stick to the
cartel agreement.
But each firm has incentive to renege on the
agreement.
It is difficult for oligopoly firms to form cartels and
honor their agreements (Cartels are not
sustainable over the long run).
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The distinction between cooperative and non-
cooperative games is unrelated to themathematical description by means of pure
strategies and pay-off functions of a game.
Rather, it depends on the possibility or
impossibility of coalitions, communication, andside-payments. Princeton PhDThesis of28
pages by Nash submitted in 1951
Nash describes the possible equilibrium in n-
person non-cooperative games and reduces the
results to include cooperative games as well.
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The Equilibrium for an Oligopoly
Nash equilibrium: a situation in which
economic participants interacting with one another
each choose their best strategy given the strategies
that all the others have chosen
Our duopoly example has a Nash equilibriumin which each firm produces Q=40.
Given that bRural produces Q=40,Cingulars best move is to produce Q=40.
Given that Cingular produces Q=40,bRurals best move is to produce Q=40.
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A Comparison of Market Outcomes
When firms in an oligopoly individually choose
production to maximize profit,
Qis greater than monopoly Qbut smaller than competitive market Q
Pis greater than competitive market Pbut less than monopoly P
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The Size of the Oligopoly
As the number of firms in the market increases,
the price effect becomes smaller the oligopoly looks more and more like a
competitive market
Papproaches MC the market quantity approaches the sociallyefficient quantity
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Game Theory
Game theory: the
study of how people
behave in strategic
situations.
Theory of rational
behavior for interactive
decision problems.
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Game Theory.
In a game, several agents strive to maximize
their (expected) utility index by choosing
particular courses of action, and each agent's
final utility payoffs depend on the profile of
courses of action chosen by allagents. Theinteractive situation, specified by the set of
participants, the possible courses of action of
each agent, and the set of all possible utility
payoffs, is called a game; the agents 'playing' agame are called theplayers.
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Game Theory
Dominant strategy: a strategy that is best
for a player in a game regardless of the
strategies chosen by the other players
Prisoners dilemma: a game between
two captured criminals that illustrateswhy cooperation is difficult even when it is
mutually beneficial. It is used to explain the basic
problem of when the pursuit of self-interest by
each player in a game leads to a poor outcome
for all
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An example of the fundamental problem of cooperation
is the case where two industrial nations have erected
trade barriers to each others exports. Because of themutual advantages of free trade, both countries would
be better off if these barriers were eliminated. But if
either country were to eliminate its barriers unilaterally,
it would find itself facing terms of trade that hurt its owneconomy. In fact, whatever one country does, the other
country is better off retaining its own trade barriers.
Each country has an incentive to retain trade barriers,
leading to a worse outcome than would have beenpossible had both countries cooperated with each
other.
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Prisoners Dilemma Example
The police have caught Ranga and Billa,
two suspected bank robbers, but only have
enough evidence to imprison each for 1 year.
The police question each in separate rooms,
offer each the following deal: If you confess and implicate your partner,
you go free.
If you do not confess but your partner implicatesyou, you get 20 years in prison.
If you both confess, each gets 8 years in prison.
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Prisoners Dilemma Example
Outcome: Ranga and Billa both confess,
each gets 8 years in prison.
Both would have been better off if both remained
silent.
But even if Ranga and Ranga had agreed before
being caught to remain silent, the logic of self-
interest takes over and leads them to confess.
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Robert Axelrod*s Question:
Under what conditions will cooperation emerge in a world
of egoists without central authority?
Axelrod ran several iterated Prisoners Dilemma
tournaments for computer programs. The winning
program was TIT FOR TAT
TIT FOR TATs Strategy:
1. Begin with cooperation
2. Respond to cooperation with cooperation
3. Respond to defection with defection
* Author of Evolution of Co-operation and Professor at University of Michigan
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Why People Sometimes Cooperate
When the game is repeated many times,
cooperation may be possible. (Iterative
Prisoners Dilemma)
Under suitable conditions, cooperation based
upon reciprocity can develop even betweenantagonists. An indefinite number of interactions,
therefore, is a condition under which cooperation
can emerge.
For cooperation to prove stable, the future must have a
sufficiently large shadow... the importance of the next
encounter between the same two individuals must be great
enough to make [noncooperation] an unprofitable strategy.
Side Stepping for a Moment Life
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Side-Stepping for a Moment - LifeLessons from TIT FORTAT
1. Dont be envious the success of others is aprerequisite for your own success
2. Dont be the first to defect cooperate aslong as you get cooperation in return
3. Reciprocate both cooperation and defection not forgiving and forgiving too easily can both
be costly
4. Dont be too clever being incomprehensibleis dangerous, to encourage cooperation you
need to make it easy for others to see your
intentions
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1. Resale Price Maintenance
Occurs when a manufacturer imposes lower limits
on the prices retailers can charge.
Is often opposed because it appears to reduce
competition at the retail level.
Yet, any market power the manufacturer hasis at the wholesale level; manufacturers do not
gain from restricting competition at the retail level.
The practice has a legitimate objective:preventing discount retailers from free-riding
on the services provided by full-service retailers.
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Competition Act on RPM
Anti-competitive agreements
3. (1) No enterprise or association of enterprises
or person or association of persons shall enter
into any agreement in respect of production,
supply, distribution, storage, acquisition orcontrol of goods or provision of services, which
causes or is likely to cause an appreciable
adverse effect on competition within India.
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Contd..
(4) Any agreement amongst enterprises or
persons at different stages or levels of the
production chain in different markets, in respect
of production, supply, distribution, storage, sale
or price of, or trade in goods or provision ofservices, including
(e) resale price maintenance, shall be an
agreement in contravention of sub-section (1) if
such agreement causes or is likely to cause anappreciable adverse effect on competition in
India.
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Contd..
Explanation
(e) "resale price maintenance" includes any
agreement to sell goods on condition that the
prices to be charged on the resale by the
purchaser shall be the prices stipulated by theseller unless it is clearly stated that prices lower
than those prices may be charged.
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2. Predatory Pricing
Occurs when a firm cuts prices to prevent entry
or drive a competitor out of the market,so that it can charge monopoly prices later.
Illegal under Competition Act, but hard for the
Competition Commission to determine when a
price cut is predatory and when it is competitive &
beneficial to consumers.
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The predatory price under the Competition Act
means the sale of goods or provision of services,
at a price which is below the cost, as may bedetermined by regulations, of production of goods
or provision of services, with a view to reduce
competition or eliminate the competitors
[Explanation (b) ofSection 4]
Many economists doubt that predatory pricing is a
rational strategy:
It involves selling at a loss, which is extremelycostly for the firm. It can backfire.
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Zenith, American TV set manufacturers alleged that the
Japanese companies were selling their products belowcosts in the US, while selling similar products in Japan
at above cost levels to crosssubsidise the former loss
making sales.
The predation recoupment story, therefore, does notmake sense, and we are left with the more plausible
inference that the defendants did not sell below cost in
the first place. They were just engaged in hard
competition. US Dept of Justice 1986
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According to an International Herald Tribune
article, the French government ordered
amazon.com to stop offering free shipping to its
customers, because it was in violation of French
predatory pricing laws. After Amazon refused toobey the order, the government proceeded to
fine them 1,000 per day. Amazon continued to
pay the fines instead of ending its policy of
offering free shipping.
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France Telecom/WanadooThe European
Court of Justice judged that Wanadoo (Now
Orange Internet France) charged less than cost
in order to gain a lead in the French broadband
market. They have been ordered to pay a fine of10.35m.
German government ordered Wal-Mart to
increase its prices in Germany.
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Unemployment due to slide-down of indigenous
retailers as a result of FDI in retail, sidelining of
consumers welfare due to predatory pricing by
retail giants, leading to their monopolistic
position and dictating of retail prices and undulyaffecting of farmers due to non-remunerative
prices, paid by procurement centres constituted
by big corporates.
Report of the Standing Committee on
FDI in Retail Sector.
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Chinese Tyres Vs ATMA
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Worried by massive 1300 per cent jump in tyre imports from
China in the last five years,(08.12.2008)Automotive Tyre
Manufacturers Association (ATMA) asked government to
immediately impose an anti-dumping duty on import of radial
truck and bus tyres.
Truck makers, including Tata Motors, have appealed to the
Centre against the anti-dumping duty on bus and truck radialtyres imported from China. Chinese radial tyre makers too
have made a similar appeal. The Designated Authority,
Directorate General of Anti-Dumping and Allied Duties,
recommended the imposition of definitive anti-dumping duty
on bus and truck radial tyres from China and Thailand inJanuary 2010, on a petition filed by the Automotive Tyre
Manufacturers Association. 13.07.2010
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3. Tying or Tie-in Arrangement
Occurs when a manufacturer bundles two products
together and sells them for one price (e.g., Microsoftincluding a browser with its operating system)
Critics argue that tying gives firms more market
power by connecting weak products to strong ones.
Others counter that tying cannot change market
power: Buyers are not willing to pay more for two
goods together than for the goods separately.
(a) "tie-in arrangement" includes any agreement requiring
a purchaser of goods, as a condition of such purchase, to
purchase some other goods;
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Observations
Oligopolies can end up looking like monopolies
or like competitive markets, depending on the
number of firms and how cooperative they are.
The prisoners dilemma shows how difficult it is
for firms to maintain cooperation, even whendoing so is in their best interest.
Policymakers use the competition laws to
regulate oligopolists behavior. The properscope of these laws is the subject of ongoing
controversy.
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Monopolistic Competition
Monopolistic competition:
a market structure in which many firms sellproducts that are similar but not identical.
Examples:
apartments books bottled water
clothing fast food
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Comparing Perfect & Monop. Competition
yesnone, price-takerfirm has market power?downward-
slopinghorizontalD curve facing firm
differentiatedidenticalthe products firms sell
zerozerolong-run econ. profits
yesyesfree entry/exit
manymanynumber of sellers
monopolistic
competition
perfect
competition
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C i Oli l & C i i
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Comparing Oligopoly & Monop. Competition
highlowlikelihood of fierce
competition
lowhigh
importance of strategic
interactions between firms
manyfewnumber of sellers
monopolistic
competitionoligopoly
A Mono oli ti all Com etiti e Fi m
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profit
ATC
P
A Monopolistically Competitive FirmEarning Profits in the Short Run
The firm faces adownward-sloping
D curve.
At each Q,MR
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losses
A Monopolistically Competitive FirmWithLosses in the Short Run
For this firm,P
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Monopolistic Competition and Monopoly
Short run: Under monopolistic competition,
firm behavior is very similar to monopoly.
Longrun: In monopolistic competition,
entry and exit drive economic profit to zero.
If profits in the short run:New firms enter market,taking some demand away from existing firms,prices and profits fall.
If losses in the short run:Some firms exit the market,remaining firms enjoy higher demand and prices.
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A Monopolistic Competitor in the Long Run
Entry and exitoccurs until
P=ATCand
profit = zero.
Notice that thefirm charges a
markup of price
over marginal
cost, and doesnot produce at
minimum ATC. Quantity
Price
ATC
D
MR
Q
MC
MC
P= ATC
markup
Why Monopolistic Competition Is
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Why Monopolistic Competition IsLess Efficient than Perfect Competition
1. Excess capacity The monopolistic competitor operates on the
downward-sloping part of its ATCcurve,produces less than the cost-minimizing output.
Under perfect competition, firms produce thequantity that minimizes ATC.
2. Markup over marginal cost
Under monopolistic competition,P>MC. Under perfect competition,P=MC.
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Monopolistic Competition and Welfare
Monopolistically competitive markets do not
have all the desirable welfare properties ofperfectly competitive markets.
Because P>MC, the market quantity is below
the socially efficient quantity. Yet, not easy for policymakers to fix this problem:
Firms earn zero profits, so cannot require them
to reduce prices.
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Monopolistic Competition and Welfare
Number of firms in the market may not be optimal,
due to external effects from the entry of new firms:
the product-variety externality:surplus consumers get from the introductionof new products
the business-stealing externality:losses incurred by existing firmswhen new firms enter market
The inefficiencies of monopolistic competition aresubtle and hard to measure. No easy way for
policymakers to improve the market outcome.
Ad i i
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Advertising
In monopolistically competitive industries,
product differentiation and markup pricinglead naturally to the use of advertising.
In general, the more differentiated the products,
the more advertising firms buy.
Economists disagree about the social value of
advertising.
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Th C iti f Ad ti i
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The Critique of Advertising
Critics of advertising believe:
Society is wasting the resources it devotes toadvertising.
Firms advertise to manipulate peoples tastes.
Advertising impedes competition it creates the perception that products aremore differentiated than they really are,allowing higher markups.
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Th D f f Ad ti i
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The Defense of Advertising
Defenders of advertising believe:
It provides useful information to buyers. Informed buyers can more easily find and
exploit price differences.
Thus, advertising promotes competition andreduces market power.
Ad ti i Si l f Q lit
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Advertising as a Signal of Quality
A firms willingness to spend huge amounts
on advertising may signal the quality of its productto consumers,regardless of the contentofads.
Ads may convince buyers to try a product once,
but the product must be of high quality for peopleto become repeat buyers.
The most expensive ads are not worthwhileunless they lead to repeat buyers.
When consumers see expensive ads,they think the product must be good if the companyis willing to spend so much on advertising.
B d N
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Brand Names
In many markets, brand name products coexist
with generic ones.
Firms with brand names usually spend more on
advertising, charge higher prices for the products.
As with advertising, there is disagreement aboutthe economics of brand names
Th C itiq of B and Nam
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The Critique of Brand Names
Critics of brand names believe:
Brand names cause consumers to perceivedifferences that do not really exist.
Consumers willingness to pay more for brand
names is irrational, fostered by advertising. Eliminating govt protection of trademarkswould reduce influence of brand names,result in lower prices.
The Defense of Brand Names
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The Defense of Brand Names
Defenders of brand names believe:
Brand names provide information about qualityto consumers.
Companies with brand names have incentive
to maintain quality, to protect the reputation oftheir brand names.
Observations
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Observations
Differentiated products are everywhere;
examples of monopolistic competition abound.
The theory of monopolistic competition
describes many markets in the economy,
yet offers little guidance to policymakers lookingto improve the markets allocation of resources.
Some more Anti Competitive
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Some more Anti CompetitivePractices
Oil companies to review petrol prices every
month The public sector oil companies: Indian
Oil Corporation,Hindustan Petroleum
Corporation, and Bharat Petroleum Corporation
will review petrol prices on a monthly basis. Andchanges in price, if any, will be through mutual
consensus and remain at a uniform rate for the
public sector undertaking (PSU) companies.
Business Line Dt 15.07.2010
(Price Fixing Legal or Illegal?)
Commerce Ministry for anti dumping duty on
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Commerce Ministry for anti-dumping duty on
Chinese chemical:Acting on a complaint by Tata
Chemicals, the Commerce Ministry hasrecommended imposition of anti-dumping duty on
imports of a chemical from China used in
household cleaning products.
Based on preliminary findings, the Directorate
General of Anti-dumping and Allied Duties (DGAD)
has recommended a provisional duty of up to
US$0.671 per kg on import of SodiumTripolyphosphate (STPP) from China.
Business Line Dt 28th May 2010
Advisory Panel on Institutions and Market
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Advisory Panel on Institutions and Market
Structure - Volume V RBIReport:
Under the provisions of Competition Act, every person orenterprise proposing to enter into a combination is
required to give notice to the Commission before
entering into a combination and wait for 210 days. This,
apart from delaying the whole process, is likely to raiseregulatory conflicts. This is applicable to all categories of
banks including SBI, its associates and nationalised
banks. Considering the gravity of the matter and the
repercussions, it is necessary to have a serious look into
the whole issue and if considered necessary, Central
Government should give exemption to banks under
Section 54 of Competition Act.
Anticompetitive Practices OECD Definition
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Anticompetitive Practices OECD Definition
Refers to a wide range of business practices in
which a firm or group of firms may engage inorder to restrict inter-firm competition to
maintain or increase their relative market
position and profits without necessarily providing
goods and services at a lower cost or of higher
quality.
Intel and AMD: A long history in court
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Intel and AMD: A long history in court 1991--AMD files an antitrust complaint in Northern
California claiming that Intel engaged in unlawful acts
designed to secure and maintain a monopoly.
1992--A court rules against Intel and awards AMD $10
million plus a royalty-free license to any Intel patents used
in AMD's own 386-style processor.
1995--AMD settles all outstanding legal disputes with Intel
in a deal that gives AMD a shared interest in the x86 chip
design, which remains to this day the basic architecture of
chips used to make personal computers.
2005--AMD files an antitrust suit against Intel in U.S. Thecomplaint alleges that Intel has unlawfully maintained its
monopoly in the x86 microprocessor market by coercing
customers worldwide from dealing with AMD.http://news.cnet.com/Intel-and-AMD-A-long-history-in-court/2100-1014_3-
5767146.html?tag=nw.20
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The Competition Commission of India (CCI) has
prepared a 245-page dossier detailing how the NationalStock Exchange (NSE) has over several years abused
its dominant position and financial muscle to kill
competition in the country's stock exchange space.
The investigation, carried out by a director general (DG)
of CCI, has found that NSE violated Section 4(2)( a)( ii),
and Section 4(2)( e) read with 4(1) of the Competition
Act, 2002. CCI has suggested several remedial
measures which could lead to the division of NSE intomore than one entity so that there is competition in the
country's stock exchange business. TOI 22.11.2010
List of ACP
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List of ACP
Dumping
Exclusive dealing
Price fixing
Refusal to deal
Dividing territories
Tying or Tie-in
Predatory pricing
Resale Price Maintenance
Absorption of a competitor
Subsidies from government
Protectionism, Tariffs and
Quotas
Bid rigging