Lecture17_Collusion2_Econ121_Fall2010

Lecture17_Collusion2_Econ121_Fall2010 - Lecture 17...

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Click to edit Master subtitle style  4/28/11 Lecture 17 Collusion 2 Econ 121: Industrial Organization UC Berkeley Fall 2010 Prof. Cristian Santesteban
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 4/28/11 Overview Preliminaries Profit-Possibility Frontier Tacit Collusion Cost Asymmetries
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 4/28/11 Overview Midterm Grades by Friday Midterm dropped if you do better in Final Exam Midterm Solutions on bspace today Problem Set #6 on bspace this Thursday Revised Syllabus by Thursday Office hours today in my office: 512 Evans
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 4/28/11 The Profit-Possibility Frontier To collude firms must answer two questions: What will industry output be? What will the output of each firm be? Depends on industry profits and allocation of profits among firms. The possibilities available are identified by the Profit-Possibility Frontier (PPF).
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 4/28/11 The Profit-Possibility Frontier Duopoly Homogeneous good PPF shows the maximum profits that can be earned by firm i , given a specified level of profit for firm j.
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 4/28/11 The Profit Possibility Frontier
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 4/28/11 PPF: Notes Points inside the frontier such as C are inefficient. Points outside the frontier are not feasible. Point C here is the Cournot outcome. Point M is the collusive outcome if the two firms split profits evenly. How to derive the PPF?
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Lecture17_Collusion2_Econ121_Fall2010 - Lecture 17...

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