10GottIdenMktsShow

10GottIdenMktsShow - Markets and Market Structures...

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1 Markets and Market Structures Relationship: firms, industries, and markets Using cross elasticity to define markets Models of market structures Four models of output markets Perfect competition Monopoly Oligopoly Monopolistic competition Two models of input (labor) markets Perfect competition (ch. 15) Monopsony and monopoly (ch.16)
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2 Defining the Relevant Market Define the set of goods : cross elasticities within market are relatively high . cross elasticities outside the market are relatively low . Markets can be defined narrowly or broadly
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3 Defining the Relevant Market Example : Automobiles or transportation. Narrowly defined: the automobile industry; or, Broadly defined: transportation Oil or energy? Phone lines or telecommunications?
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4 Courts and Markets Courts can determine the market. 1953: antitrust suit vs. DuPont -- illegal domination of the cellophane market. (80%) DuPont: relevant market not cellophane broader market of flexible packaging materials . (20 %) Court decided in favor of DuPont.
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10GottIdenMktsShow - Markets and Market Structures...

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