Lecture25_MarketDef_VertIntegration_Econ121_Fall2010

Lecture25_MarketDef_VertIntegration_Econ121_Fall2010 -...

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Click to edit Master subtitle style  2/2/11 Lecture 25 Antitrust: Market Definition and Vertical Integration Econ 121: Industrial Organization UC Berkeley Fall 2010 Prof. Cristian Santesteban
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 2/2/11 Hypothetical Monopolist Test
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 2/2/11 Own Price Elasticity Purpose of defining a relevant market is to identify market power Market power depends on the own price elasticity of demand
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 2/2/11 Own and Cross Price Elasticities We know that the profit-maximizing condition for a firm with market power is Lerner Index = 1/εii, where εii is the firm’s own-price elasticity of demand A cross-price elasticity, εji, only captures the substitution to another product j but not the full reduction in demand for the product in question i.
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 2/2/11 Own and Cross Price Elasticities Cross price elasticities are useful in determining which products should be considered reasonable substitutes. This helps in the determination of
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This note was uploaded on 02/01/2011 for the course ECON 121 taught by Professor Woroch during the Fall '07 term at University of California, Berkeley.

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Lecture25_MarketDef_VertIntegration_Econ121_Fall2010 -...

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