Lecture 25 - ECONOMICS 100A Professor Dan Acland 11/23/10...

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ECONOMICS 100A Professor Dan Acland 11/23/10 Lecture 25 ASUC Lecture Notes Online is the only authorized note-taking service at UC Berkeley. Do not share, copy, or illegally distribute (electronically or otherwise) these notes. Our student-run program depends on your individual subscription for its continued existence. These notes are copyrighted by the University of California and are for your personal use only. D O N O T C O P Y Sharing or copying these notes is illegal and could end note taking for this course. ICLICKER QUIZ ANNOUNCEMENTS Slide : Announcements 1. Problem Set #6 has been revised. The cost function in problem 3 has been changed from TC = $10,000 + $100Q to TC = $100Q. This should only affect the answer to 3c. The revised problem set has been posted to bSpace. 2. Office hours next Tuesday, 2:00 – 4:00 pm, 697 Evans. 3. No office hours next Thursday. 4. Comments about final: a. Similar three-part structure (like midterm) b. Same amount of short-answer and graph & explain c. More problem solving d. Less than twice as long as the midterm. (same amount of short answer and graph and explain material but more problem solving—but not so much that it takes twice as long to finish as the midterm) e. Cumulative (with more emphasis on material we’ve covered since the midterm, but the exam covers material even before then) 5. Review session Thursday, Dec 9, 11:10 – 12:30am, 2050 VSLB (here) a. Please email me ( acland@econ.berkeley.edu ) with topics and/or questions you would like me to review (I will review topics at your request) LECTURE Slide : Lecture outline: Oligopoly 1. Sequential-move quantity competition: Stackelberg 2. Simultaneous-move quantity competition: Cournot 3. Price competition: Bertrand a. Sequential-move b. Simultaneous-move 4. Comparison of output under different models 5. Choosing the right model Slide : Why do we care about duopoly or other forms of oligopoly? My hope is that, last time we met, I convinced you that monopoly (even when it’s a natural monopoly that inevitably arises from technological conditions within firms) is harmful to society and can be unfair in fairly unambiguous ways. The deal with oligopoly is similar to the deal with monopoly; there are circumstances monopolies and oligopolies can develop through strong-arming (where one firm bullies and harasses other firms out of the market). The case where this usually arises (small number of large firms) is similar to the reason you find one large firm. It’s because the AC for the firms in an industry is decreasing over a very large range of output. Left graph : If this is the demand for the entire industry, this AC is the AC for a single firm, and this MC goes through the AC, then we know that in LR equilibrium (because MC for each firm dips down at a small output quantity) there will be a ton D D AC AC PC: Lots of firms Oligopoly: Few big firms MC MC
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ECONOMICS 100A ASUC Lecture Notes Online: Approved by the UC Board of Regents 11/23/10 D O N O T
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This note was uploaded on 02/06/2012 for the course ECON 100A taught by Professor Woroch during the Fall '08 term at University of California, Berkeley.

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Lecture 25 - ECONOMICS 100A Professor Dan Acland 11/23/10...

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