寡頭壟斷與粘性價(jià)格英文版

1、OligopolyChapter 16-2Models of Oligopoly BehaviorNo single general model of oligopoly behavior exists.OligopolyAn oligopoly is a market structure characterized by:Few firmsEither standardized or differentiated productsDifficult entryInterdependenceA key characteristic of oligopolies is that each fir

2、m can affect the market, making each firms choices dependent on the choices of the other firms. They are interdependent.Characteristics OligopolyOligopolies are made up of a small number of mutually interdependent firms.Each firm must take into account the expected reaction of other firms.Interdepen

3、denceThe importance of interdependence is that it leads to strategic behavior.Strategic behavior is the behavior that occurs when what is best for A depends upon what B does, and what is best for B depends upon what A does.Oligopolistic behavior includes both ruthless competition and cooperation. Ga

4、me TheoryStrategic behavior has been analyzed using the mathematical techniques of game theory.Game theory provides a description of oligopolistic behavior as a series of strategic moves and countermoves.Characteristics of OligopolyOligopolies are made up of a small number of firms in an industryOli

5、gopolistic firms are mutually interdependentIn any decision a firm makes, it must take into account the expected reaction of other firmsOligopolies can be collusive or noncollusiveFirms may engage in strategic decision making where each firm takes explicit account of a rivals expected response to a

6、decision it is making16-8Models of Oligopoly BehaviorThere is no single model of oligopoly behaviorThe cartel model is when a combination of firms acts as if it were a single firm and a monopoly price is setAn oligopoly model can take two extremes:The contestable market model is a model of oligopoli

7、es where barriers to entry and exit, not market structure, determine price and output decisions and a competitive price is setOther models of oligopolies give price results between the two extremes16-9The Cartel ModelA cartel model of oligopoly is a model that assumes that oligopolies act as if they

8、 were a monopoly and set a price to maximize profitOutput quotas are assigned to individual member firms so that total output is consistent with joint profit maximizationIf oligopolies can limit the entry of other firms, they can increase profits16-10Implicit Price CollusionExplicit (formal) collusi

9、on is illegal in the U.S. while implicit (informal) collusion is permittedImplicit price collusion exists when multiple firms make the same pricing decisions even though they have not consulted with one anotherSometimes the largest or most dominant firm takes the lead in setting prices and the other

10、s follow16-11Why Are Prices Sticky?One characteristic of informal collusive behavior is that prices tend to be sticky they dont change frequentlyInformal collusion is an important reason why prices are stickyAnother is the kinked demand curveIf a firm increases price, others wont go along, so demand

11、 is very elastic for price increasesIf a firm lowers price, other firms match the decrease, so demand is inelastic for price decreases16-12The Kinked Demand Curve GraphA gap in the MR curve exists A large shift in marginal cost is required before firms will change their priceQPQMC1DMRPIf P increases

12、, others wont go along, so D is elastic If P decreases, other firms match the decrease, so D is inelasticMC2Gap16-13The Contestable Market ModelThe contestable market model is a model of oligopolies where barriers to entry and exit, not market structure, determine price and output decisions and a co

13、mpetitive price is setEven if the industry contains only one firm, it will set a competitive price if there are no barriers to entryMuch of what happens in oligopoly pricing is dependent on the specific legal structure within which firms interact16-14Comparing Contestable Market and Cartel ModelsThe

14、 cartel model is appropriate for oligopolists that collude, set a monopoly price, and prevent market entryThe contestable market model describes oligopolies that set a competitive price and have no barriers to entryOligopoly markets lie between these two extremesBoth models use strategic pricing dec

15、isions where firms set their price based on the expected reactions of other firms16-15New Entry as a Limit on the Cartelization Strategy and Price WarsPrice wars are the result of strategic pricing decisions gone wildA predatory pricing strategy involves temporarily pushing the price down in order t

16、o drive a competitor out of businessThe threat of outside competition limits oligopolies from acting as a cartelThe threat will be more effective if the outside competitor is much larger than the firms in the oligopoly16-16Why Are Prices Sticky?When there is a kink in the demand curve, there has to

17、be a gap in the marginal revenue curve.The kinked demand curve is not a theory of oligopoly but a theory of sticky prices.D2The Kinked Demand CurveD1MR2MR1PriceQuantity0QPabcdMC0MC1The Kinked Demand CurveGame Theory and Strategic Decision MakingThe prisoners dilemma is a well-known game that demonst

18、rates the difficulty of cooperative behavior in certain circumstances.Game Theory and Strategic Decision MakingIn the prisoners dilemma, where mutual trust gets each one out of the dilemma, confessing is the rational choice.Prisoners Dilemma and a Duopoly ExampleThe prisoners dilemma has its simples

19、t application when the oligopoly consists of only two firmsa duopoly.Prisoners Dilemma and a Duopoly ExampleBy analyzing the strategies of both firms under all situations, all possibilities are placed in a payoff matrix.A payoff matrix is a box that contains the outcomes of a strategic game under va

20、rious circumstances. Firm and Industry Duopoly Cooperative EquilibriumPricePrice575$800 700 600 500 400 300 200 100 0(a) Firms cost curves1 2 3 4 5 6 7 8Quantity (in thousands)MCATC$800 700 600 500 400 300 200 100 0 1 2 3 4 5 6 7 8 9 10 11Monopolist solution MRDCompetitive solutionMC(b) Industry: Co

21、mpetitive and monopolist solutionQuantity (in thousands)McGraw-Hill/Irwin 2004 The McGraw-Hill Companies, Inc., All Rights Reserved.Firm and Industry Duopoly Equilibrium When One Firm CheatsPricePricePrice$800 700 600 500 400 300 200 100 0$800 700 600 500 400 300 200 100 0$900 800 700 600 500 400 30

22、0 200 100 05505505501 2 3 4 5 6 71 2 3 4 5 6 7AMCATCQuantity (in thousands)(a) Noncheating firms lossAMCATCQuantity (in thousands)(b) Cheating firms profitABC1 2 3 4 5 6 7 8Quantity (in thousands)(c) Cheating solutionNon-cheating firms outputCheating firms output McGraw-Hill/Irwin 2004 The McGraw-Hi

23、ll Companies, Inc., All Rights Reserved.Duopoly and a Payoff MatrixThe duopoly is a variation of the prisoners dilemma game.The results can be presented in a payoff matrix that captures the essence of the prisoners dilemma.B Cheats B Does not cheat A Does not cheat A CheatsB +$200,000B 0A 0A +$200,0

24、00B $75,000A $75,000A $75,000B $75,000The Payoff Matrix of Strategic Pricing DuopolyDominant StrategyIn an oligopoly, firms try to achieve a dominant strategya strategy that produces better results no matter what strategy other firms follow.The interdependence of oligopolies decisions can often lead

25、 to the prisoners dilemma.Prisoners DilemmaImplicit Price CollusionFormal collusion is illegal in the U.S. while informal collusion is permitted.Implicit price collusion exists when multiple firms make the same pricing decisions even though they have not consulted with one another.Implicit Price Col

26、lusionSometimes the largest or most dominant firm takes the lead in setting prices and the others follow.Cooperation and CartelsIf the firms in an oligopoly cooperate, they may earn more profits than if they act independently.Collusion, which leads to secret cooperative agreements, is illegal in the

27、 U.S., although it is legal and acceptable in many other countries.Price-Leadership Cartels may form in which firms simply do whatever a single leading firm in the industry does. This avoids strategic behavior and requires no illegal collusion.Implicit Price CollusionWhy Are Prices Sticky?Informal c

28、ollusion is an important reason why prices are sticky.Another is the kinked demand curve.CartelsA cartel is an organization of independent firms whose purpose is to control and limit production and maintain or increase prices and profits. Like collusion, cartels are illegal in the United States.Cond

29、itions necessary for a cartel to be stable (maintainable):There are few firms in the industry.There are significant barriers to entry.An identical product is produced.There are few opportunities to keep actions secret.There are no legal barriers to sharing agreements.OPEC as an Example of a CartelOP

30、EC: Organization of Petroleum Exporting Countries.Attempts to set prices high enough to earn member countries significant profits, but not so high as to encourage dramatic increases in oil exploration or the pursuit of alternative energy sources.Controls prices by setting production quotas for membe

31、r countries.Such cartels are difficult to sustain because members have large incentives to cheat, exceeding their quotas.The Diamond CartelIn 1870 huge diamond mines in South Africa flooded the gem market with diamonds. Investors at the time wanted to control production and created De Beers Consolidated Mines, Ltd., which quickly took control of all aspects of the world diamond trade.The Diamond Cartel, headed by DeBeers, h