101chapter8

101chapter8 - Chapter 8. Monopoly How? Firm behavior...

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Chapter 8. Monopoly Chapter 8. Monopoly How? Firm behavior Monopoly vs. Competition Price Discrimination Policy
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What makes a monopoly? What makes a monopoly? single supplier of good firm supply = market supply firm demand = market demand
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How does it happen? How does it happen? 1. no close substitutes otherwise, makers of substitutes are competition example: electricity
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2. barriers to entry 2. barriers to entry hard (impossible) for new competitors to enter market barriers are natural legal
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natural monopoly natural monopoly high fixed costs large economies of scale one firm meets market demand, with lowest cost
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examples examples distribution of water electricity natural gas
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legal monopoly legal monopoly firm owns most of natural resource firm has exclusive license, patent, copyright
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examples examples Microsoft & Powerpoint
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This note was uploaded on 04/02/2012 for the course ECO 101 taught by Professor Laniga during the Spring '08 term at SUNY Oswego.

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101chapter8 - Chapter 8. Monopoly How? Firm behavior...

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