Chapter 17 Real World Competition and Technology

Chapter 17 Real World Competition and Technology - Chapter...

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Chapter 17 Real-World Competition and Technology Firms are profit maximizes not even in the short run, but definitely in the long run Real world decision makers’ income is often a cost of the firm Monitoring problem – the need to oversee employees to ensure that their actions are the best interest of the firm o Principle agent problem Incentive compatible contract in which the incentive of each of the two parties to the contract are made to correspond as closely as possible Lazy monopolists firms that do not push for efficient but enjoy the position they are already in. o Describes many real world corporations X-inefficiency are firms operating far less efficiently than they could technically Competition limits these firms degree of laziness Many US firms have restructured themselves so that they can compete internationally Corporate takeover in which another firm or a group of individuals issues a tender offer to gain control of the company Establishing an initial presence in a market can be more effective tan obtaining a patent
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This note was uploaded on 02/23/2011 for the course ECON 2010 taught by Professor Moonjung during the Spring '09 term at UVA.

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Chapter 17 Real World Competition and Technology - Chapter...

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