204_summer_2009_lecture_13

204_summer_2009_lecture_13 - University of Toronto...

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Unformatted text preview: University of Toronto Department of Economics ECO 204 Summer 2009 Sayed Ajaz Hussain Lecture 13 1 Ajaz Hussain. Department of Economics Last Time Market structure Market boundaries Measures of market concentration Concentration Ratio (CR n ) Herfindahl Hirschman Index (HHI) HHI and mergers 2 Ajaz Hussain. Department of Economics Today Types of firms: Competitive Market Power Monopsony Dual Monopoly Some objectives of the firm Profit algebra 3 Ajaz Hussain. Department of Economics Types of Firms Ajaz Hussain. Department of Economics 4 Competitive Firm Firm with Market Power Monopsony Dual Monopoly Output Inputs Output Inputs Output Inputs Output Inputs Price of Output: P Prices of Inputs: P L , P K Some Objectives of the Firm Standard assumption in economics: Firm seeks to maximize profits Assumptions behind this objective? Other objectives: Maximize PV profits Maximize revenues Maximize PV revenues Maximize market share Minimize AC Empire building (agency problem) When would a company have the objectives above?...
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204_summer_2009_lecture_13 - University of Toronto...

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