Eco 204 s ajaz hussain do not distribute clearly the

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Unformatted text preview: s: ( Since ) we see that: 2 ECO 204 Chapter 16: Analysis of Firms with Market Power (this version 2012-2013) University of Toronto, Department of Economics (STG). ECO 204, S. Ajaz Hussain. Do not distribute. Clearly, the only way that a firm can earn positive profits is if: This can only happen if the new equilibrium market output supplied by the one firm desiring market power, is : $ A COMPETITIVE FIRM DESIRING MARKET POWER MARKET $ This price and output yields positive profits for one firm Profits Note, as the firm wanting to be a monopolist produces more output than when it was competitive but because it prevents other firms from supplying output, the total market output is lower The only way that is if the firm charges a price and stops buyers from purchasing the output from other sellers. The wannabe monopolist must erect barriers to entry (BTE) to stop seller from supplying . Precisely how firms erect BTE is a topic worthy of a book but in the meantime here are some examples (see Against Monopoly for more examples): American Medical Association: The AMA is a private organization and has a monopoly (granted by the U...
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This document was uploaded on 01/19/2014.

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