PAM_3400_Lec2_EconReg_web_F08

PAM_3400_Lec2_EconReg_web_F08 - Economic Regulation...

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    Economic Regulation Regulation of firms’ decisions in a  market Price Quantity Entry and Exit Often called “competition policy”
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    Rationale Traditional focus is on protecting  consumers from the adverse effects of  monopoly power Price, quantity and entry/exit regulation  often used together to reinforce each  other Complex undertaking in practice
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    Consumer Demand Demand curve measures marginal benefit of  consuming additional unit (marginal benefit) Area under the demand curve up to q measures  total benefit of consumption (total benefit) Area under demand curve up to p measures total  payment for consumption (total expenditure) Consumer surplus  is the area above p and below  demand curve (total benefit – total expenditure)
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    Producer Supply Supply curve measures marginal opportunity cost of  producing additional unit (MC)
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This note was uploaded on 03/30/2009 for the course PAM 3400 taught by Professor Tennyson during the Fall '08 term at Cornell.

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PAM_3400_Lec2_EconReg_web_F08 - Economic Regulation...

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