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Unformatted text preview: • Monopoly o 1. Single firm (or single dominant firm) o 2. Barriers to entry o 3. Must not be close substitutes • Barriers to entry o 1. Legal or institutional Patents Exclusive franchises o 2. Cost advantage Economies of scale • so far, short run: at least one input fixed • long run: all inputs variable o 1. All inputs ↑ x% →output↑>x% “increasing returns to scale” Costs per unit ↓ o 2. All inputs ↑ x% →output ↑<x% “decreasing returns to scale” o 3. all inputs ↑X% →output ↑X% “constant RTS” o Short run perf. Comp.: min. SRATC o Long run: min. LRATC o...
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This note was uploaded on 04/19/2011 for the course EC 201 taught by Professor Ballard during the Fall '08 term at University of Michigan.
- Fall '08