Lecture25 - Lecture 25 Monopsony Bilateral Monopoly...

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

View Full Document Right Arrow Icon
Lecture 25 Monopsony Bilateral Monopoly Antitrust issues
Background image of page 1

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

View Full DocumentRight Arrow Icon
Monopsony Single buyer Examples: Government Labor union “Downstream firm” relative to production input
Background image of page 2
Monopsony A monopsonist benefits when it faces an upward sloping supply curve By restricting demand, a monopsonist causes price to decline. The monopsonist’s marginal expenditure from consuming an additional unit exceeds its price, as the additional expenditure at the same time results in an increase in price for all units consumed. Monopsony power results in a deadweight loss and transfer of surplus from sellers to the buyer.
Background image of page 3

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

View Full DocumentRight Arrow Icon
Monopsony quantity price Marginal value Consumer surplus Supply Q1 P1
Background image of page 4
Monopsony quantity price Marginal value Consumer surplus Increasing consumption increases price loss gain Supply Q1 Q2
Background image of page 5

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

View Full DocumentRight Arrow Icon
Monopsony quantity price Supply Marginal expenditure Marginal value
Background image of page 6
Marginal expenditures = marginal value Q quantity price P Deadweight loss Transfer to consumer Supply Marginal expenditure
Background image of page 7

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

View Full DocumentRight Arrow Icon
Image of page 8
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 01/17/2012 for the course ECON 100A taught by Professor Safarzadeh during the Fall '09 term at UC Irvine.

Page1 / 13

Lecture25 - Lecture 25 Monopsony Bilateral Monopoly...

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