1、產業組織理論Theory of Industrial Organization Lecture 4 Competition and Monopoly OutlineMajor types of marketEconomics of perfect competitionEconomics of monopolyMarket power and its measurementTypes of Market市場的類型按產品或服務供給方的集中程度分類完全競爭市場壟斷競爭市場寡頭壟斷市場完全壟斷市場買方壟斷市場與買方壟斷市場市場的類型市場類型廠商數目產品差別程度對價格控制的程度進出一個行業的難易程度接

2、近哪種市場情況完全競爭壟斷競爭寡頭壟斷很多很多幾個一個完全無差別有差別有差別或無差別唯一的產品，沒有替代品沒有有一些相當程度很大程度，但經常受到管制很容易比較容易比較困難很困難，幾乎不可能一些農產品香煙、糖果鋼鐵、汽車公共事業，如水、電完全競爭市場的特征完全競爭市場具有以下五個特征：市場上有大量的買者和賣者每一廠商提供的產品都是完全同質的沒有交易成本資源具有完全的流動性信息是完全的市場上有大量的買者和賣者相對于整個市場的總需求量和總供給量而言，任何一個買者的需求量和任何一個廠商的供給量都是微不足道的。一個買者買與不買，或者購買多少，以及一個賣者賣與不賣，或者賣多賣少，都不會對市場價格產生任何影

3、響價格接受者 ：完全競爭市場中的每一個消費者和廠商對市場價格沒有任何控制力量，只能被動地接受既定的市場價格，稱之為價格接受者每一廠商提供的產品都是完全同質的同質性意味著產品之間是可以完全替代的，使得消費者無法區分產品是哪家廠商生產的，或者說購買任意一家廠商的產品都是一樣的在這種情況下，如果某一廠商將產品價格提高到市場價格之上，消費者會立刻到其他地方購買，導致顧客完全流失。當然，單個廠商總是可以按照既定的市場價格把自己的產品全部賣出去資源具有完全的流動性資源自由流動有兩層含義：一是購買者能夠很輕易地從一家廠商轉向另外一家廠商，二是廠商可以在沒有特殊成本發生的情況下進入或退出市場。這種特殊成本包括

4、新廠商進入市場或者在位廠商退出市場必須承擔的成本在資源完全流動的條件下，資源可以及時地投入到有經濟利潤的生產中，并能夠及時地從虧損的生產中退出來，而不必負擔任何成本信息是完全的一方面，生產者了解產品生產方面的信息，包括投入要素價格、自身的生產函數、產品價格等消費者同樣掌握著有關自身偏好、效用函數、產品價格等方面的信息。在完全信息條件下，廠商了解其他生產者都按照何種價格銷售，因此不會抬高價格另一方面，消費者準確地了解在什么地方能夠以市場價格購買到同質商品，出價也絕對不會高于市場價格 完全競爭模型的五個假設原子性假設，即市場上有許多廠商，每個廠商都很小，以至于其行為對其他廠商沒有明顯的影響產品同質

5、性假設，即不同企業生產的產品是一樣的充分信息假設，即所有的參與者 知道所有廠商制定的價格機會均等假設，即任一個企業都能取得所有生產技術自由進出假設，即任何廠商都可自由進入或退出The Assumptions of Perfect CompetitionPerfect competition as modeled by economists is quite different from the everyday view of competition. Each firm in a perfectly competitive market recognizes that its effect

6、on the overall market is insignificantPerfectly competitive firms do not view other firms as rivals; they make business decisions without considering the actions or reactions of other firms in the industry. Each firm views the market price as independent of its own level of outputCharacteristics of

7、perfect competitionLarge number of buyers and sellers, A perfectly competitive market contains many buyers and sellers, each small relative to total purchases or salesHomogeneous product or identical product. Because consumers cannot distinguish one firms product from anothers, they are indifferent

8、about their supplierPerfect information. All economic agents (firms and consumers) have all of the information they need to make economic decisionsCharacteristics of perfect competitionNo transaction costs. Transaction costs are the costs of using the market, such as the costs of negotiating and mon

9、itoring a contract. In a perfectly competitive market, transaction costs are zero for both buyers and sellersFree entry and exit. Adjustments to changing market conditions require that resources enter or leave the industry. In a perfectly competitive market these adjustments occur without fi rms hav

10、ing to incur any special costs; there are no barriers to entry or exitCharacteristics of perfect competitionA perfectly competitive market ensure that firms and consumers are price takersConsumers are indifferent about their supplier, have perfect information about price, and incur no transaction co

11、sts in switching to a different sellerFirm can sell as much output as it wants at the going price. Therefore, buyers view the market price as beyond their control; they cannot find any firm willing to sell output at a price below the market priceThe Demand Curve Facing a Perfectly Competitive FirmA

12、perfectly competitive firm takes the equilibrium market price of $2 as fixed; it faces the horizontal and perfectly elastic demand curve shown as d. For a perfectly competitive firm, the demand curve is also equal to the marginal revenue curveThe Firms Supply CurveThe profit-maximizing rule tells a

13、firm to produce that quantity of output for which marginal revenue equals marginal costIn the special case of a firm in a perfectly competitive industry, marginal revenue always equals priceTo understand why, remember that a perfectly competitive firm can sell another unit of output without having t

14、o lower its price.The Firms Short Run Supply CurveA firm should produce in the short run if its total revenue is greater than or equal to its avoidable costs, defined earlier as the sum of variable costs and the recoverable part of fixed costsIn the short run, therefore, a profit-maximizing firm wil

15、l choose to produce some output as long as the revenue it gets from selling that outputits total revenue (TR) is greater than or equal to the costs of the variable inputs it must hire to produce that outputits VCThe Firms Short Run Supply CurveA profit-maximizing fi rm will produce some output in th

16、e short run as long as price is greater than or equal to average variable costThe point at which P = AVC is called the shutdown point . Because of the relationship between marginal and average, the point at which P = AVC = MC is the minimum point on the AVC curveA Perfectly Competitive Firms Short-R

17、un Supply CurveThe firms short-run supply curve is vertical at an output of zero for all market prices less than P0, the minimum of AVC. For prices above P0, the supply curve is identical to the firms short-run marginal cost curve, SRMC.The Firms Long Run Supply CurveIn the long run, all inputs are

18、variable and a firm will leave an industry if it is earning negative economic profits. In the long run, a profit-maximizing firm will produce only if total revenue is greater than or equal to total costsThe firms long-run supply curve is simply its marginal cost curve above the minimum point on the

19、long-run average total cost curveFor any price above the minimum point on the average total cost curve, the firm will earn positive economic profits. For any price below this minimum, the firm will leaveThe Market Supply Curve and EquilibriumThe short-run market supply curve is derived by choosing a

20、 price and adding up the quantities of output produced by each fi rm at that price. (Remember that the number of fi rms in the industry in the short run is fi xed.) Market equilibrium is the intersection of the market demand and market supply curves. At the equilibrium price, the quantity supplied b

21、y producers is equal to the quantity demanded by consumers.Short-Run Equilibrium for a Firm and the MarketIn panel (b), the market equilibrium price is p1In panel (a), a representative fi rm takes the market price, p1, as given and maximizes profi t by producing q1, where price equals marginal cost

22、In this case, price exceeds average total cost at q1, so the fi rm earns positive economic profi t of q1(p1 - ATC1), which equals the blue areaProperties of Competitive EquilibriumThe perfectly competitive model serves as a valuable reference point because of the desirable properties of long-run equ

23、ilibriumThe equilibrium resource allocation in a competitive economy is efficient, meaning that no possible reallocation of resources will make one market consumer or firm better off without hurting anotherAll mutual gains from trade have been achieved. One important type of efficiency concerns the

24、level of output being produced and purchasedProperties of Competitive EquilibriumEfficiency in the level of output, called allocative efficiency, requires that the marginal benefit of producing another unit of output equal its marginal costIn competitive equilibrium, price, a measure of the value a

25、consumer places on the last unit bought, equals the marginal cost to society of producing that last unitThis ensures that the socially optimal quantity of the good is produced Competitive equilibrium also exhibits efficiency in productionProperties of Competitive EquilibriumIn long-run equilibrium e

26、ach firm is producing at the minimum point on its long-run average cost curve. Output is produced using the least costly combination of inputs. Furthermore, high-cost firms will be forced to exit the marketA third characteristic of competitive equilibrium is that each perfectly competitive firm earn

27、s zero economic profits in long-run equilibrium. Therefore, productive resources receive only their opportunity cost and nothing moreLong-Run Equilibrium for a Firm and the MarketIn long-run equilibrium, no firm can make either positive or negative economic profits; price must equal average cost so

28、that economic profi ts equal zeroThe long-run equilibrium for the firm occurs at the minimum of LRAC where LRAC = LRMC = SRAC = SRMC. P* is the long-run equilibrium price; each firm produces q*. At this price and output level, there is no incentive for entry into or exit from this market壟斷性競爭市場的特點大量

29、廠商：有許多廠商爭奪相同的顧客群體，每個廠商的市場份額都不大。產品差異：不同的廠商生產的產品是有差異的，但相互之間具有較高的替代性。自由進入：廠商可以自由進入或退出該行業。化妝品、服裝、食品、餐館、影視娛樂、家用小電器等很多行業都屬于壟斷競爭市場。寡頭壟斷市場的特點市場當中只有少數幾個廠商，每個廠商生產同質或者有差異的產品。廠商之間存在相互依存性，一個廠商在采取行動時必須要考慮其他廠商的反應。這是寡頭壟斷市場最突出的特點。幾種市場結構的比較各種市場結構中廠商行為和市場均衡的特點 企業數量產品類型一家企業壟斷寡頭壟斷幾家企業有差別壟斷競爭完全競爭無差別市場結構的分類很多家企業幾種市場結構的比較從

30、社會的角度看，這四種市場結構孰優孰劣呢？對這個問題無法做一個確定性的回答。 完全競爭市場能夠實現社會福利的最大化壟斷則會降低社會的福利壟斷競爭和寡頭壟斷對社會福利的影響則不太容易判斷，尤其是寡頭壟斷 Economics of perfect competition競爭的涵義當我們在日常用語中說到 “競爭”這個詞的時候，我們更多的時候用其來指個體參與的一項活動有若干競爭對手目標是戰勝競爭對手，取得勝利經濟學中的競爭特指市場競爭，是市場參與者為實現自身的經濟利益和既定目標而不斷進行的角逐過程賣方與賣方的競爭買方與買方的競爭不同類型市場中的競爭完全競爭市場有數量眾多的買方和賣方，故沒有人擁有 (可以

31、影響競爭結構的)“市場勢力”(market power) 。市場過程的參與者關于可能的各種選擇擁有完全信息賣方提供的是同質性商品。資源的流動與配置沒有粘性。參與經濟行為的人都是價格接受者在完全競爭市場上，產品的價格是由整個市場的產品供給和需求決定的，也被稱作受價者市場在完全競爭市場，廠商只需制定產量決策市場需求曲線是水平線單個廠商不能影響價格，是受價者每個廠商的產量相對于市場供給量而言，微不足道每個廠商改變產量都不會影響產品的市場價格 不同類型市場中的競爭 在完全競爭市場，單個廠商面臨的需求曲線是水平的，即完全彈性。價格P產量 Q完全競爭市場的廠商產量選擇 在完全競爭市場，單個廠商會按照P=M

32、C來選擇自己的產量（利潤最大化產量）價格P產量 QQ*p*完全競爭市場的廠商產量選擇 完全競爭模型是經濟學家分析市場作用的一個參照系但是，這一模型存在一些問題：忽略了廠商的作用只描述了市場調節個體選擇的結果，而沒有說明調節的過程。調節的過程才是現實的經濟生活。教材8.6完全競爭市場的廠商產量選擇 不同類型市場中的競爭壟斷性競爭市場的主要特征廠商數量多但規模相對比較小不同廠商的產品存在差異，因而需求曲線向下傾斜廠商進出不受限制，資源可以在行業間轉移廠商數目眾多，每個廠商都要在一定程度上接受市場價格，但又都可對市場施加一定程度的影響市場上的每個經濟人的決策對其他人的影響不大，彼此相互獨立行動，互不

33、依存不同類型市場中的競爭產品差別是造成廠商之間壟斷競爭的根源，即在同樣的價格下，如果購買者對某家廠商的產品表現出特殊的愛好時，就說該廠商的產品與同行業內其他廠商的產品具有差別。只要同行業產品之間的差別不是大到完全不能相互替代，廠商之間就會相互競爭，產品的相互替代性是廠商競爭的根源產品差別可以表現為：質量差別、功用差別、非實質性差別（如包裝、商標、廣告等引起的印象差別），以及銷售條件差別不同類型市場中的競爭寡頭壟斷市場的主要特點市場上的廠商只有少數幾個（當廠商為兩個時，叫雙頭壟斷），每個廠商在市場中都具有舉足輕重的地位，對其產品價格具有相當的影響力任一廠商進行決策時，必須把競爭者的反應考慮在內，

34、因而既不是價格的制定者，更不是價格的接受者，而是價格的尋求者產品同質，彼此依存的程度很高，叫純寡頭；產品有差別，彼此依存關系較低，叫差別寡頭不同類型市場中的競爭在寡頭壟斷市場上，市場價格高于邊際成本，同時價格高于最低平均成本。由于寡頭市場存在競爭，有時競爭還比較激烈，因而其效率比壟斷市場要高寡頭市場上往往存在著產品差異從而滿足消費者的不同偏好寡頭企業規模較大，便于大量使用先進的生產技術，而激烈的競爭又使廠商加速產品和技術革新，提高效率在位廠商：市場中已有的廠商。在位廠商不喜歡競爭競爭意味著有更多生產同類產品的廠商進入替代品增多會提高需求彈性，降低在位廠商的市場勢力，從而降低其利潤為限制競爭，在

35、位廠商通常有兩種做法合謀求助政府，讓政府出臺相應政策在位廠商限制競爭的做法合謀：廠商之間達成協議，共同采取某種行為，以提高市場勢力，增加利潤。維持價格分享市場 例子2000年，中國彩電廠商價格聯盟房地產業的默契式價格聯盟合謀現實中，廠商之間的合謀組織很難保持協調廠商之間活動的交易成本太高成員廠商為增加自己私利，普遍存在違背合謀協議的動機，如私下降價反壟斷法禁止在位廠商更渴望也更愿意，政府出臺相應的政策，對競爭進行法律限制合謀Economics of monopoly市場壟斷的涵義壟斷：一種產品只有一個賣家，或市場的全部或部分份額由一家企業所占有，企業有確定市場價格的權利該定義非常含混，取決與對

36、廠商出售產品的不同定義：如果商品的定義足夠寬泛，那么沒有一種產品是只由一家廠商出售的。如：中國的鐵路市場，產品界定為鐵路運輸，還是交通運輸如果商品的定義足夠狹窄，則每個廠商都是壟斷者，因為沒有兩家廠商出售完全相同的產品考察廠商出售產品的需求價格彈性。如果彈性很小，則廠商生產的產品很難被替代品，廠商就可以把價格定得很高，漲價時仍能保持大部分業務。如果彈性很大，則廠商生產的產品很容易被替代，廠商擁有的提高價格的能力很小界定壟斷的方法廠商具有的將價格提高到邊際成本之上的能力被稱作市場勢力，與需求價格彈性成反比壟斷：廠商出售產品的需求價格彈性為0 ，擁有的市場勢力無限大嚴格意義上的壟斷市場很少見。不過

37、，只要廠商面臨的需求曲線不是完全彈性的（向右下方傾斜），廠商就具有一定的市場勢力，能夠提高價格，是覓價者PQPQQ完全彈性的需求完全無彈性的需求PQP彈性大的需求彈性小的需求常見情況形成市場壟斷的原因邊際成本造成壟斷關于市場壟斷的形成，一個很重要的原因是因為邊際成本降低，就是說客戶越多、產量越大、成本越低但是隨著技術的進步，這種壟斷可能被打破。以往的電力傳輸之所以依賴于大電網，就是因為它的規模經濟，大電廠的發電成本低。但現在出現了很多先進的小型發電技術（例如小燃氣輪機發電），它的發電成本低、損耗少，使用靈活方便，這樣一來，原來的大發電廠的壟斷優勢就被逐漸地削弱了形成市場壟斷的原因技術專利造成壟

38、斷在技術或者制度的演進中人們一旦選擇了某種技術發展和演進的道路，就很可能沿著這條道路走下去，而不容易跳轉到另一條道路上去如微軟的Windows軟件，最先占據了個人電腦操作系統的主流市場，以后就很難換成別的軟件。作為應用軟件的開發商，不得不和它兼容。而作為用戶，過去使用了微軟，為了使用更多的應用軟件，也就不得不繼續依賴于它形成市場壟斷的原因財政補貼造成壟斷如中國很多地方的政府補貼居民用電，造成電價過低。不少人買了電采暖裝置，利用補貼電價以得到好處，由此造成了很大程度的資源浪費。能源補貼還會造成環境破壞為了優化資源配置和減少環境污染，政府不但應該取消對能源的價格補貼，還要想法設法將企業的外部成本內

39、部化，也就是要對能源使用征環境稅形成市場壟斷的原因規模經濟：當大規模生產出現長期平均成本降低時，個別廠商會擴大生產規模，增加產量，提高在行業總產量中的比重，產業中的競爭者減少行業進入壁壘：阻礙新廠商進入某個行業的各種因素：法律限制、進入成本、廣告、產品差別控制了生產某種商品的全部資源或基本資源的供給政府特許甄別甄別:通過提供一系列不同價格與質量水平的消費組合,銷售者能夠按照消費者愿意支付的價格來區分消費者平裝書、散裝月餅、飛機的經濟倉等有些時候，企業為了實行價格歧視，故意降低某些現有產品的質量，即生產受損產品。雖然受損產品的價格低，但其生產成本有時要比正常產品成本高純粹捆綁：消費者必須購買捆綁

40、產品混合捆綁：消費者可以選擇整體購買組合，或單獨購買微軟的office定價：Excel，Word， Powerpoint，Acess，Microsoft MailMicrosoft Mail 為80$, 其余495$(2060$)整套軟件的組合價格: 750$捆綁銷售Market power and its measurementMarket Power市場勢力（Market Power），也稱市場權力。市場勢力是指賣方（seller）或買方（buyer）不適當地影響商品價格的能力。對于賣方來說，市場勢力也就是賣方的壟斷傾向市場勢力是市場失靈的一種比較普遍的現象。它是指一個市場參與者或市場參與

41、者的小集團不適當地影響市場價格的能力市場勢力可以使市場不能有效配置資源，導致市場無效率，因為它會使價格和數量背離供求平衡Market Power市場勢力的表現形式主要有行業壟斷、自然壟斷、壟斷競爭、價格生產聯盟等企業的角度看，擁有市場勢力意味著能使其獲得更多的利潤對消費者而言，企業擁有市場勢力意味著不得不從自己的錢包中掏出更多的錢從社會角度看，市場勢力的存在意味著社會資源使用的低效Market Power市場勢力具有兩種表現形式：賣方壟斷力(monopoly power）和買方壟斷力(monopsony power）生產者對產品價格的影響力是賣方壟斷力，消費者對產品價格的影響力是買方壟斷力。現

42、實世界中，每個生產者和消費者實際上都具有一定的市場勢力任何有能力將產品價格定在邊際成本，即完全競爭的價格，之上的廠商，都被認為是有市場勢力或壟斷力（monopoly)的Market Power按照廠商擁有市場勢力的時間長短，可將其分為長期市場勢力和短期市場勢力按照廠商行為的主動性，將市場勢力分為防御性市場勢力和進攻性市場勢力將市場勢力按照時間長短進行劃分是有重要意義的。短期意味著限于2-3年之內，廠商可能擁有影響其他廠商和市場參與者的能力Market Power市場勢力實際上是對壟斷程度的測量，但是，擁有市場勢力并不意味著廠商就一定能夠運用這種勢力從市場中獲利，因為在僅僅擁有短期市場勢力的條件

43、下，市場勢力的運用是受到極大限制的擁有短期市場勢力的廠商只能謹慎地運用市場勢力，防止引發眾多新廠商的進入的局面擁有短期市場勢力的一個額外的好處是廠商能夠具有保持市場的穩定能力和在一些短暫的情況做出有利于自己的決策Market Power將市場勢力分為防御性市場勢力和進攻性市場勢力。對于理解市場勢力與市場績效的關系有重要意義防御性市場勢力是指廠商面對其他廠商采取進攻行為時所擁有的抵御這種進攻的能力,而且這種能力必須是可信的、確實存在的。進攻性市場勢力是指廠商具有主動擴大市場份額或者獲得額外收益能力。但是擁有進攻性市場勢力，并不意味著市場勢力是長期的企業市場勢力的衡量需求價格彈性估計法 需求價格彈

44、性反映了需求量變化對價格變化的敏感程度。如果需求量變化超過價格變化，即計算結果大于1，就表明前者對后者的敏感程度強，彈性大；反之亦然當需求量不變的情況下，提高價格，需求的價格彈性就會越小，等于1直至小于1，到最后成為無彈性，這時企業的市場勢力最大。企業擁有的市場勢力與需求價格彈性呈反向相關，即需求價格彈性越小，市場勢力水平越高企業市場勢力的衡量勒納指數估計法 勒納指數是指價格高出邊際成本的比率，即：勒納指數=（價格-邊際成本)/價格勒納指數：企業市場勢力的衡量勒納指數與企業擁有的市場勢力呈正向相關，并與其所處于的市場結構類型有關，即處于完全競爭市場中的企業市場勢力最小，依次為壟斷競爭市場、寡頭

45、壟斷市場和完全壟斷市場，呈遞增趨勢完全壟斷的負面效應就是出現市場失靈，因此，政府“反壟斷”法派上用場勒納指數表明，即使是壟斷廠商對價格也只有有限的控制力企業市場勢力的衡量需求交叉彈性估計法 需求交叉彈性反映一種商品需求量對另一種商品價格的敏感程度如果兩種商品是可替代的，那么需求交叉彈性為正。商品交叉彈性越高，替代性越強，生產這兩種商品的企業擁有的市場勢力就越弱它一般用于反托拉斯案例中，以幫助判斷對于某特定企業的商品而言，是否市場中存在該商品的替代品Introduction to Welfare Economicsconsumer surplus and producer surplusCons

46、umer surplus is the difference between the maximum amount consumers are willing to pay for a good and the amount they actually payProducer surplus is the difference between the market price the producer receives for selling a unit of output and its reservation supply price, the lowest price for whic

47、h fi rms would be willing to produceConsumer and Producer SurplusAt the competitive price of $40 and output of 50:A consumer surplus equal to triangle ABCProducer surplus at this price and output level is the area of triangle BCDThe Economics of MonopolyA monopoly is the sole producer of a good for

48、which there are no close substitutes. Thus, a monopolist is the industry and faces the market demand curve for its productThat demand curve, like any market demand curve, slopes downward, and the monopolist can operate at any point along that market demand curveIt can choose a high price and sell a

49、relatively small quantity of output, or it can choose a lower price and sell more outputThe Relationship Between MR and PriceA monopolist, like any profit-maximizing firm, will choose to produce the quantity for which marginal revenue equals marginal costUnlike a perfectly competitive firm, marginal

50、 revenue for a monopolist does not equal price. Because a monopolist faces the downward-sloping market demand curve, the only way it can sell an additional unit of output is by lowering the price on all units. *Although it gains revenue from the additional unit of output, it loses revenue on those u

51、nits previously sold at a higher priceChanges in a Monopolists Total Revenue Resulting from a Price CutIf output increases by one unit from Q1 to Q1 + 1, the monopoly gains area Q1CB(Q1 + 1) in revenue, which equals P2 Q = P2 However, on the units produced up to Q1, the monopolist loses revenue equa

52、l to area P1ACP2, which equals Q1 P. Marginal revenue is the sum of these two areas, or P2+Q1P. Because P 0, this is clearly less than P2; marginal revenue for a monopolist is less than priceProfit-Maximizing Price and Quantity for a MonopolistThe monopolist maximizes profit by producing the quantit

53、y of output for which marginal revenue equals marginal cost, QM The profit-maximizing price, PM, is found from the market demand curveThis graph also illustrates the fact that the marginal revenue curve corresponding to a linear demand curve has the same vertical intercept as the demand curve but is

54、 twice as steeply slopedThe Degree of Market PowerAny firm that has the ability to set price above marginal cost, the perfectly competitive equilibrium price, is said to have market power or monopoly powerThe monopolist will choose the profit-maximizing pricequantity combination on the market demand

55、 curve, we do not know how high the monopoly price will be in relation to marginal costHow much can the monopolist raise price above marginal cost? What constraints does it face on raising price signifi cantly above marginal cost?The Lerner IndexThe Lerner Index , or the monopoly markup is an index

56、that can measure the degree of market powerThe Lerner Index indicates that even a monopolist has only limited control over priceEffect of Price Elasticity of Demand on the Gap Between Profit-Maximizing Price and Marginal CostThe monopolists ability to raise price above marginal cost depends on its e

57、lasticity of demandIf the market demand curve is relatively elastic (a), the monopolists profit-maximizing price is relatively close to its marginal cost. A less elastic demand curve (b), results in a relatively larger gap between price and marginal costWelfare ComparisonWhy do economists worry abou

58、t market power? The major concern is that monopoly misallocates resources by producing the “wrong” amount of a good, where price does not equal marginal cost. In other words, monopoly is always allocatively inefficientIt is very important to understand that this problem arises because the monopoly p

59、rice is greater than the marginal cost of the goodWelfare Loss Due to MonopolyUnder perfect competition, output is QPC and price is PPC; consumer surplus is area ABC and producer surplus is area CBDThe monopolist produces QM priced at PM; consumer surplus is AEF and producer surplus is EFGDThe deadweight loss resulting from monopoly is area FBGCautionsWhy policymakers might not want to attack firms with market power as aggressively as theory might suggestAllowing