io1001 - INDUSTRIAL ORGANIZATION intermediate level Spring...

Info iconThis preview shows pages 1–8. Sign up to view the full content.

View Full Document Right Arrow Icon

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

View Full DocumentRight Arrow Icon

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

View Full DocumentRight Arrow Icon

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

View Full DocumentRight Arrow Icon

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

View Full DocumentRight Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: INDUSTRIAL ORGANIZATION intermediate level Spring 10 (Slides to J. Holms lectures) Practical Information- Lectures (time, place) Focus: i) importance, ii) difficulty Language - Plan of the course (see plan of the lectures) - Literature (see plan of the lectures) - Examination - Voluntary group assignment (10p, only valid in the ordinary and first re-exam) - short essay (max 2000 words) - presentation (15 minutes) - rules (see separate sheet) - Written examination (90p, no calculators) - Pass: 50p (that is 40p on the exam if 10p are earned in the group assignment). - Ordinary exam, re-exam (about one month after) - Re-take in August (written exam: 100p, points from group assignment not valid) - Examinations outside Lund or on other occasions will not be given! 1. Introductory Remarks Contents: Purpose of the Course Theoretical Background: The Classical Dichotomy Legislation in US and EU The Development of IO The Purpose of the Course The purpose of the course is to give an introduction to IO and the theoretical tools used to analyze IO problems. What is IO? Different definitions: IO is the economic analysis of how firms and industries behave/act in the market place. Branch of economics concerned by the study of imperfect competition. Difference from Micro? - Emphasis on extensions and complications. - A large number of different models. Theoretical Background: The Classical Dichotomy Perfect Competition model - Many firms - Prices are perceived as given - Perfect information - Free entry and exit Supply: can be derived from the firms marginal cost curves p = MC (max Profit= TR TC = pq - c(q) --> p = c(q)) Demand: depends on the consumers' willingness to pay for the good (figures) Equilibrium p=MC; p = AC (in the long run) ---> Pareto optimal situation Monopoly model - One firm - The monopoly sets the price - Perfect information Supply: can be derived from the firms marginal cost and the demand conditions (max Profit= TR TC= p(q)q - c(q)) --> --> p(q)q+p = c(q)) = MR(q*) = MC(q*)) Demand: depends on the consumers' willingness to pay for the good. (figures) Equilibrium: MR = MC ==> p > MC p > AC (in the long run) ---> Not a Pareto optimal situation The classical dichotomy --> motivation for intervention Legislation in US and EU US Legislation Sherman Act, 1890 - prohibits contracts and agreements in restraint of trade (e.g. price fixing, collusive agreements) - prohibits monopolization of the market EU Legislation Article 81: The following shall be prohibited as incompatible with the common market: all agreements between undertakings, decisions by associations of undertakings and concerted practices which may affect trade between Member States and which have as their object or effect the prevention, restriction or distortion of competition within the common market, and in particular those which (a) directly or indirectly fix purchase or selling prices or any other trading conditions; (b) limit or control production, markets, technical...
View Full Document

This note was uploaded on 12/27/2011 for the course ECON 468 taught by Professor Jean-francoishoude during the Fall '10 term at Wisconsin Milwaukee.

Page1 / 84

io1001 - INDUSTRIAL ORGANIZATION intermediate level Spring...

This preview shows document pages 1 - 8. Sign up to view the full document.

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