Lec. III.2 Monopoly Power in Rare Earth Minerals 110810 sv

Lec. III.2 Monopoly Power in Rare Earth Minerals 110810 sv...

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onopoly Power in Rare Earth Minerals Monopoly Power in Rare Earth Minerals Recall that perfectly competitive markets are characterized by: 1. complete property rights (i.e., no public goods), i t i ti i t (i li ) 2 .a tomistic participants (i.e., no monopolies), 3. complete information (i.e., rules out inefficiencies from inadequate information), 4. no transactions costs (i.e., rules out externalities). Monopoly : a firm that is a sole seller of a product without close substitutes. “RARE by name, though not by nature, 17 elements in the periodic table— the “rare earths”—are among the most sought after materials in modern manufacturing. In tiny amounts, their unique magnetic and phosphorescent properties make them vital ingredients in a host of gadgets and components, ranging from hard drives to lasers. Though abundant in p, gg g nature, extracting them is difficult, costly, time consuming and dirty. China is the world’s largest (and for some of them the only) producer of rare arths ” earths. (The Economist, 10/02/10)
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erfect Competition: The Firm and the Industry Perfect Competition: The Firm and the Industry $ $ Firm Market Supply MC, Supply Demand = Market Price P M* P M* Demand * * Quantity Quantity At the firm level, in a perfectly competitive industry, demand is perfectly elastic. That is the price elasticity of demand is infinite ( η = ) h fi ill d th tit t hi h MC P h i idt i d t Q M Q F
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Lec. III.2 Monopoly Power in Rare Earth Minerals 110810 sv...

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