L06Sep09.306 - Lec 5: Data on Market Power; Effects of...

Info iconThis preview shows pages 1–4. Sign up to view the full content.

View Full Document Right Arrow Icon
Lec 5: Data on Market Power; Effects of Monopoly, Monopsony FRE 306 Any Principles of Econ text Schrimper,Ch 7
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Lec5: Market Power; Monopoly, Monopsony 2 How to determine market power? Ultimately, policy objective maintain competition, open access to new entrants How to determine mkt power? What data needed? Multi-approach needed; rather difficult exercise Structure, Conduct, Performance paradigm Market Structure: how many firms? Concentration ratio Demand curve facing firm (excess demand) Conduct: P vs MC; uncompetitive practices? Evidence of excess profits? Margin analysis; Rate of return? But profits already capitalized?
Background image of page 2
Monopsony 3 Structure of Industry Number of firms competing in specific mkt? How is structure changing over time? Small number firms = monopoly? Not necess. Mkt share important: CR4 (add shares 4 largest firms) Large number means competition? Not necess. Aggregate data insufficient; must examine local market structure (monopoly at region level?) What is elasticity of demand curve facing specific firm? (not market demand curve; rather excess d.c. the more inelastic, the greater the market power
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 4
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 03/09/2010 for the course LFS FRE 306 taught by Professor Barichello during the Winter '09 term at The University of British Columbia.

Page1 / 12

L06Sep09.306 - Lec 5: Data on Market Power; Effects of...

This preview shows document pages 1 - 4. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online