L19 - Today: Partial equilibrium model (one industry) D ( p...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
1 L19 Supply function, Entry and market structure Today: ± Partial equilibrium model (one industry) ± Producers with cost functions ± Questions - Equilibrium with N firms - Free entry: How many firms (N)? () 1 2 D pp = Producer: Cost curves 2 () Cy y = pall $1 F = ATC = MES MES yA T C == MC = TC = Optimal supply (price takers) 2 y = pall F = p yp p < = ⎩⎭
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
2 Industry supply (N firms) ± Individual supply ± Aggregate supply S(p)? () p yp p < ⎧⎫ = ⎨⎬ ⎩⎭ p Sp p < = Equilibrium with N firms ± Demand for a good ± There are N identical firms in the industry ± Questions: 1. Equilibrium price (Market clearing) 2. Individual and aggregate production? 3. Profits (positive? zero?) 4. Should we expect entry? () 1 0 D pp = Equilibrium with N firms pall 1 , 2 = 2 D =− 4 N = * * ** * () () p y Dp π = = == = ±
Background image of page 2
Background image of page 3
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 06/04/2011 for the course ECON 301 taught by Professor Hansen during the Spring '08 term at Wisconsin.

Page1 / 3

L19 - Today: Partial equilibrium model (one industry) D ( p...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online