微觀經(jīng)濟(jì)學(xué)英文課件：chapter-9 The Analysis of Competitive Markets

1、Chapter 9The Analysis of Competitive Markets1Chapter 1Topics to be DiscussedEvaluating the Gains and Losses from Government Policies-Consumer and Producer SurplusThe Efficiency of a Competitive MarketMinimum Prices2Chapter 1Topics to be DiscussedPrice Supports and Production QuotasImport Quotas and

2、TariffsThe Impact of a Tax or Subsidy3Chapter 1Evaluating the Gains and Losses fromGovernment Policies-Consumer and Producer SurplusReviewConsumer surplus is the total benefit or value that consumers receive beyond what they pay for the good.Producer surplus is the total benefit or revenue that prod

3、ucers receive beyond what it cost to produce a good.4Chapter 1ProducerSurplusBetween 0 and Q0 producers receive a net gain from selling each product-producer surplus.ConsumerSurplusConsumer and Producer SurplusQuantity0PriceSD5Q0Consumer C107Consumer BConsumer ABetween 0 and Q0 consumers A and Brece

4、ive a net gain from buying the product-consumer surplus5Chapter 1To determine the welfare effect of a governmental policy we can measure the gain or loss in consumer and producer surplus.Welfare EffectsGains and losses caused by government intervention in the market.Evaluating the Gains and Losses f

5、romGovernment Policies-Consumer and Producer Surplus6Chapter 1The loss to producers isthe sum of rectangleA and triangle C. TriangleB and C together measurethe deadweight loss.BACThe gain to consumers isthe difference betweenthe rectangle A and thetriangle B.Deadweight LossChange in Consumer andProd

6、ucer Surplus from Price ControlsQuantityPriceSDP0Q0PmaxQ1Q2Suppose the governmentimposes a price ceiling Pmaxwhich is below the market-clearing price P0.7Chapter 1Observations:The total loss is equal to area B + C.The total change in surplus = (A - B) + (-A - C) = -B - CThe deadweight loss is the in

7、efficiency of the price controls or the loss of the producer surplus exceeds the gain from consumer surplus.Change in Consumer andProducer Surplus from Price Controls8Chapter 1ObservationConsumers can experience a net loss in consumer surplus when the demand is sufficiently inelasticChange in Consum

8、er andProducer Surplus from Price Controls9Chapter 1BAPmaxCQ1If demand is sufficientlyinelastic, triangle B can be larger than rectangleA and the consumer suffers a net loss fromprice controls.ExampleOil price controlsand gasoline shortagesin 1979SDEffect of Price ControlsWhen Demand Is InelasticQua

9、ntityPriceP0Q210Chapter 1Price Controls and Natural Gas Shortages1975 Price controls created a shortage of natural gas.What was the deadweight loss?11Chapter 1Supply: QS = 14 + 2PG + 0.25POQuantity supplied in trillion cubic feet (Tcf)Demand: QD = -5PG + 3.75POQuantity demanded (Tcf)PG = price of na

10、tural gas in $/mcf and PO = price of oil in $/b.Price Controls and Natural Gas ShortagesData for 197512Chapter 1PO = $8/bEquilibrium PG = $2/mcf and Q = 20 TcfPrice ceiling set at $1This information can be seen graphically:Price Controls and Natural Gas ShortagesData for 197513Chapter 1BA2.40CThe ga

11、in to consumers is rectangle A minus triangleB, and the loss to producers is rectangleA plus triangle C.SD2.00Quantity (Tcf)0Price($/mcf)5101520253018(Pmax)1.00Price Controls and Natural Gas Shortages14Chapter 1Measuring the Impact of Price Controls1 Tcf = 1 billion mcfIf QD = 18, then P = $2.40 18

12、= -5PG + 3.75(8)A = (18 billion mcf) x ($1/mcf) = $18 billionB = (1/2) x (2 b. mcf) x ($0.40/mcf) = $0.4 billionC = (1/2) x (2 b. mcf) x ($1/mcf) = $1 billionPrice Controls and Natural Gas Shortages15Chapter 1Measuring the Impact of Price Controls1975Change in consumer surplus = A - B = 18 - 0.04 =

13、$17.6 billionChange in producer surplus= -A - C = -18-1 = -$19.0 billionPrice Controls and Natural Gas Shortages16Chapter 1Measuring the Impact of Price Controls1975 dollars, deadweight loss= -B - C = -0.4 - 1 = -$1.4 billionIn 2000 dollars, the deadweight loss is more than $4 billion per year.Price

14、 Controls and Natural Gas Shortages17Chapter 1The Efficiency ofa Competitive MarketWhen do competitive markets generate an inefficient allocation of resources or market failure?1) ExternalitiesCosts or benefits that do not show up as part of the market price (e.g. pollution)18Chapter 1The Efficiency

15、 ofa Competitive MarketWhen do competitive markets generate an inefficient allocation of resources or market failure?2)Lack of InformationImperfect information prevents consumers from making utility-maximizing decisions.19Chapter 1Government intervention in these markets can increase efficiency.Gove

16、rnment intervention without a market failure creates inefficiency or deadweight loss.The Efficiency ofa Competitive Market20Chapter 1P1Q1ABCWhen price is regulated to be no higher than P1, the deadweight loss given by triangles B and C results.Welfare Loss When PriceIs Held Below Market-Clearing Lev

17、elQuantityPriceSDP0Q021Chapter 1P2Q3ABCQ2What would the deadweightloss be if QS = Q2?When price is regulated to be no lower than P2 only Q3will be demanded. Thedeadweight loss is givenby triangles B and CWelfare Loss When PriceIs Held Above Market-Clearing LevelQuantityPriceSDP0Q022Chapter 1The Mark

18、et for Human KidneysThe 1984 National Organ Transplantation Act prohibits the sale of organs for transplantation.Analyzing the Impact of the ActSupply: QS = 8,000 + 0.2PIf P = $20,000, Q = 12,000Demand: QD = 16,000 - 0.2P23Chapter 1DRectangles A and D measure the total value of kidneys when supply i

19、s constrained.ACThe loss to suppliersis given by rectangle Aand triangle C.The Market for Kidneys, and Effectsof the 1984 Organ Transplantation ActQuantityPrice8,0004,0000$10,000$30,000$40,000SThe 1984 act effectivelymakes the price zero.BIf consumers receivedkidneys at no cost, theirgain would be g

20、iven byrectangle A less triangle B.SD12,000$20,00024Chapter 1The act limits the quantity supplied (donations) to 8,000.Loss to supplier surplus:A + C = (8,000)($20,000) + (1/2)(4,000)($20,000) = $200/m.The Market for Human Kidneys25Chapter 1Gain to recipients:A - B =(8,000)($20,000) - (1/2)(4,000)($

21、20,000) = $120/m.Deadweight loss:B + C or$200 million - $120 million = $80 millionThe Market for Human Kidneys26Chapter 1Other Inefficiency Cost1)Allocation is not necessarily to those who value the kidneys the most.2)Price may increase to $40,000, the equilibrium price, with hospitals getting the p

22、rice.The Market for Human Kidneys27Chapter 1Arguments in favor of prohibiting the sale of organs:1)Imperfect information about donors health and screening The Market for Human Kidneys28Chapter 1Arguments in favor of prohibiting the sale of organs:2)Unfair to allocate according to the ability to payH

23、olding price below equilibrium will create shortagesOrgans versus artificial substitutesThe Market for Human Kidneys29Chapter 1Minimum PricesPeriodically government policy seeks to raise prices above market-clearing levels.We will investigate this by looking at a price floor and the minimum wage.30C

24、hapter 1BAThe change in producersurplus will beA - C - D. Producersmay be worse off.CDPrice MinimumQuantityPriceSDP0Q0PminQ3Q2If producers produce Q2, the amount Q2 - Q3will go unsold.31Chapter 1BThe deadweight lossis given by triangles B and C.CAwminL1L2UnemploymentFirms are not allowed topay less

25、than wmin. Thisresults in unemployment.SDw0L0The Minimum WageLw32Chapter 1Airline RegulationDuring 1976-1981 the airline industry in the U.S. changed dramatically.Deregulation lead to major changes in the industry.Some airlines merged or went out of business as new airlines entered the industry.33Ch

26、apter 1BACAfter deregulation:Prices fell to PO. Thechange in consumer surplus is A + B.Q3DArea D is the costof unsold output.Effect of Airline Regulationby the Civil Aeronautics BoardQuantityPriceSDP0Q0Q1PminQ2Prior to deregulationprice was at Pmin and QD = Q1 and Qs = Q2.34Chapter 1Airline Industry

27、 DataNumber of carriers337286608696Passenger load factor(%)545961626769Passenger-mile rate (constant 1995 dollars).50.129.126Real cost index (1995=100)10112211110710099Real cost index corrected for fuel cost increases9498981001009819751980198519901995199635Chapter 1Airline Industry Data

28、Airline industry data show:1)Long-run adjustment as the number of carriers increased and prices decreased2)Higher load factors indicating more efficiency36Chapter 1Airline Industry DataAirline industry data show:3)Falling rates4)Real cost increased slightly (adjusted fuel cost)5) Large welfare gain3

29、7Chapter 1Price Supports andProduction QuotasMuch of agricultural policy is based on a system of price supports.This is support price is set above the equilibrium price and the government buys the surplus.This is often combined with incentives to reduce or restrict production38Chapter 1BDATo maintai

30、n a price Psthe government buys quantity Qg . The change inconsumer surplus = -A - B,and the change in producer surplus is A + B + DD + QgQgPrice SupportsQuantityPriceSDP0Q0PsQ2Q139Chapter 1D + QgQgBAPrice SupportsQuantityPriceSDP0Q0PsQ2Q1The cost to the government is the speckled rectanglePs(Q2-Q1)

31、DTotalWelfareLossTotal welfare lossD-(Q2-Q1)ps40Chapter 1Price SupportsQuestion:Is there a more efficient way to increase farmers income by A + B + D?41Chapter 1Production QuotasThe government can also cause the price of a good to rise by reducing supply.Price Supports andProduction Quotas42Chapter

32、1What is the impact of:1)Controlling entry into the taxicab market?2)Controlling the number of liquor licenses?Price Supports andProduction Quotas43Chapter 1BACS reduced by A + BChange in PS = A - CDeadweight loss = BCCDSupply RestrictionsQuantityPriceDP0Q0SPSSQ1Supply restricted to Q1Supply shifts

33、to S Q144Chapter 1BACDSupply RestrictionsQuantityPriceDP0Q0SPSSQ1Ps is maintained with and incentiveCost to government = B + C + D45Chapter 1Supply RestrictionsBAQuantityPriceDP0Q0PSSSDC = A - C + B + C + D = A + B + D.The change in consumer and producer surplus is the same as with price supports. =

34、 -A - B + A + B + D - B - C - D = -B - C.46Chapter 1Supply RestrictionsQuestions:How could the government reduce the cost and still subsidize the farmer?Which is more costly: supports or acreage limitations?BAQuantityPriceDP0Q0PSSSDC47Chapter 1Supporting the Price of Wheat1981Supply: Qs = 1,800 + 24

35、0PDemand: QD = 3,550 - 266PEquilibrium price and quantity was $3.46 and 2,630 million bushels48Chapter 1Supporting the Price of Wheat1981Price support was set at $3.70QD + QG = QDT = 3,440 -266P + QGQS = QD1,800 + 240P = 3,550 - 266P + QGQG = 506P -1,750QG = (506)(3.70) -175=122 million bushels49Cha

36、pter 1D + QgBy buying 122million bushels the governmentincreased the market-clearing price.P0 = $3.702,5662,688ABCQgAB consumer lossABC producer gainSDP0 = $3.462,6301,800The Wheat Market in 1981QuantityPrice50Chapter 1Supporting the Price of Wheat1981The change in consumer surplus = (-A -B)A = (3.7

37、0 - 3.46)(2,566) = $616 millionB = (1/2)(3.70-3.46)(2,630-2,566) = $8 millionChange in consumer surplus: -$624 million. 51Chapter 1Supporting the Price of Wheat1981Cost to the government:$3.70 x 122 million bushels = $452 millionTotal cost = $624 + 452 = $1,076 millionTotal gain = A + B + C = $638 m

38、illionGovernment also paid 30 cents/bushel = $806 million 52Chapter 1Supporting the Price of WheatIn 1985, export demand fell and the market clearing price of wheat fell to $1.80/bushel.53Chapter 1Supporting the Price of Wheat1985 Supply: QS = 1,800 + 240P1986 Demand: QD = 2580 - 194PQS = QD at $1.8

39、0 and 2,232 million bushelsPS = $3.20 To maintain $3.20/bushel a production quota of 2,425 bushels was imposed54Chapter 1Supporting the Price of Wheat1985Government Purchase: 2,425 = 2,580 - 194P + QGQG = -155 + 194PP = $3.20 - the support priceQG = -155 + 194($3.20) = 466 million bushels55Chapter 1

40、The Wheat Market in 1985QuantityPrice1,800SDP0 = $1.802,232To increase theprice to $3.20, thegovernment bought 466 million bushelsand imposeda production quotaof 2,425 bushels.D + QSSP0 = $3.201,9592,425QS56Chapter 1Supporting the Price of Wheat1985Government Purchase: Government cost = $3.20 x 466

41、= $1,491million80 cent subsidy = .80 x 2,425 = $1,940 millionTotal cost = $3.5 billion57Chapter 1Supporting the Price of WheatQuestion:What is the change in consumer and producer surplus?58Chapter 1Supporting the Price of Wheat1996 Freedom to FarmReduces price supports and quotas until 2003 when the

42、y go back into effect under the 1996 law.59Chapter 1Supporting the Price of Wheat1998 Wheat MarketP = $2.65QD = 3244 - 283PQS = 1944 + 207PQ = 2493Government subsidy of .66/bushel or $1.6 billion60Chapter 1Import Quotas and TariffsMany countries use import quotas and tariffs to keep the domestic pri

43、ce of a product above world levels61Chapter 1QSQDPWImportsABC By eliminating imports,the price is increased to PO. The gain is area A. Theloss to consumers A + B + C,so the deadweight loss is B + C.Import Tariff or QuotaThat Eliminates ImportsQuantityPriceHow high would a tariff haveto be to get the

44、 same result?DP0Q0SIn a free market, the domestic price equals the world price PW.62Chapter 1DCBQSQDQSQDAP*PwImport Tariff or Quota(general case)QuantityPriceDSThe increase in price can be achieved by a quota or a tariff.Area A is again the gain to domestic producers.The loss to consumers is A + B +

45、 C + D.63Chapter 1Import Tariff or Quota(general case)If a tariff is used the government gains D, so the net domestic product loss is B + C.If a quota is used instead, rectangle D becomes part of the profits of foreign producers, and the net domestic loss is B + C + D.DCBQSQDQSQDAP*PwQuantityDSPrice

46、64Chapter 1Question:Would the U.S. be better off or worse off with a quota instead of a tariff? (e.g. Japanese import restrictions in the 1980s)Import Tariff or Quota(general case)DCBQSQDQSQDAP*PwQuantityDSPrice65Chapter 1The Sugar QuotaThe world price of sugar has been as low as 4 cents per pound,

47、while in the U.S. the price has been 20-25 cents per pound.66Chapter 1The Sugar QuotaThe Impact of a Restricted Market (1997)U.S. production = 15.6 billion poundsU.S. consumption = 21.1 billion poundsU.S. price = 22 cents/poundWorld price = 11 cents/pound67Chapter 1The Sugar QuotaThe Impact of a Res

48、tricted MarketU.S. ES = 1.54U.S. ED = -0.3U.S. supply: QS = -7.83+ 1.07PU.S. demand: QD = 27.45 - 0.29PP = .23 and Q = 13.7 billion pounds68Chapter 1CDBQS = 4.0QS = 15.6Qd = 21.1Qd = 24.2AThe cost of the quotasto consumers was A + B + C + D, or $2.4b. The gain to producers was area A, or $1b.Sugar Q

49、uota in 1997Quantity(billions of pounds)Price(cents/lb.)SUSDUS510152025048111620PW = 11PUS = 21.93069Chapter 1CDBQS = 4.0QS = 15.6Qd = 21.1Qd = 24.2ASugar Quota in 1997Quantity(billions of pounds)Price(cents/lb.)SUSDUS510152025048111620PW = 11PUS = 21.930Rectangle D was thegain to foreign producersw

50、ho obtained quota allotments, or $600 million.Triangles B and C representthe deadweight loss of $800 million.70Chapter 1The Impact of a Tax or SubsidyThe burden of a tax (or the benefit of a subsidy) falls partly on the consumer and partly on the producer.We will consider a specific tax which is a t

51、ax of a certain amount of money per unit sold.71Chapter 1DSBDABuyers lose A + B, andsellers lose D + C, and the government earns A + D in revenue. The deadweightloss is B + C.CIncidence of a SpecificTaxQuantityPriceP0Q0Q1PSPbtPb is the price (includingthe tax) paid by buyers.PS is the price sellers

52、receive,net of the tax. The burdenof the tax is split evenly.72Chapter 1Incidence of a Specific TaxFour conditions that must be satisfied after the tax is in place:1)Quantity sold and Pb must be on the demand line: QD = QD(Pb)2)Quantity sold and PS must be on the supply line: QS = QS(PS)73Chapter 1I

53、ncidence of a Specific TaxFour conditions that must be satisfied after the tax is in place:3)QD = QS 4)Pb - PS = tax74Chapter 1Impact of a Tax Dependson Elasticities of Supply and DemandQuantityQuantityPricePriceSDSDQ0P0P0Q0Q1PbPStQ1PbPStBurden on BuyerBurden on Seller75Chapter 1Pass-through fractio

54、nES/(ES - Ed)For example, when demand is perfectly inelastic (Ed = 0), the pass-through fraction is 1, and all the tax is borne by the consumer.The Impact of a Tax or Subsidy76Chapter 1The Effects of a Tax or SubsidyA subsidy can be analyzed in much the same way as a tax.It can be treated as a negative tax.The sellers price exceeds the buyers price.77Chapter 1DSSubsidyQuantityPriceP0Q0Q1PSPbsLike a tax, the benefitof a subsidy is splitbetween buyers and sellers, dependingupon the elasticities ofsupply and demand.78Chapter 1SubsidyWith a subsidy (s), the