econ 211 lecture 14

econ 211 lecture 14 - Econ 211 Monopoly and Price Searchers...

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Econ 211 Lecture 14 Patrick McLaughlin Monopoly and Price Searchers We’ve seen price takers – firms who have no effect on price when they change production quantities. Of course, there must be price searchers, too. Price searchers – firms that affect the price of the good they sell by changing output. As output increases, price decreases. There are different pricing systems that a price searcher can operate under. 1. Single price monopolist: 2. Price discriminating monopolist. Remember, a monopoly has the following two key features: 1. No close substitutes 2. Barriers to entry Legal monopoly – market in which competition and entry are restricted by the granting of a public franchise, government license, patent, or copyright. Public franchise – exclusive right granted to a firm to supply a good or service. USPS (Before UPS and FedEx), MLB Government license – an official license that controls entry into particular occupations, professions, or industries. Medicine, law, dentistry, schoolteaching, architecture, real
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econ 211 lecture 14 - Econ 211 Monopoly and Price Searchers...

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