Qatar biggest market share biggest markup higher profits o Understand the

Qatar biggest market share biggest markup higher

This preview shows page 2 - 4 out of 5 pages.

*Qatar: biggest market share biggest markup higher profits o Understand the implications of the equations**** o To solve explicitly: Maximize profits Big Q = all firms Have to take into account what my decision and what other firm’s decision is Separate q i my firm from other firm sum Derive only q i o Reaction function: all firms identical Take out my firm then (n-1)q I am reacting to what my opponent is doing and describe via reaction function Cournot Duopoly o Symmetric model o Both firms have same reaction Take other’s q as given o Nash equilibrium o Static model o Thought processes as formulating strategy o As firms react from opponent’s strategy converge to Cournot equilibrium o Firm 2 US vs. Firm 1 Russia Output of firm 2 went up at the cost of output of firm 1 Bertrand Model
Image of page 2
Environment o Oligopoly o Identical products o Price control model o Barriers to entry o MC pricing Equilibrium o Price war o Firm 1 undercut firm 2 undercut firm 1 etc. P=MC price war o Q is a function of P With Differentiation o Max firm 1 by choosing price: TR -TC Limit Pricing Monopoly: but not hurting consumers by lowering prices this prevents entry Entrant’s residual demand curve How much entrant is gonna produce at P L ? 0 because price is too high to make any profits The European Natural Gas Market In HW: Russian vs Ukraine Russia cutting off gas supplies (comes by pipelines from Russia) need natural gas to heat/use other things US comes in NG in Europe owned by govt. (nationalized companies) production, transmission, distribution Lecture 4/18/18 Movement toward deregulation and liberalization regulations have been lifted o Natural gas and power Power own the generator Natural gas purchasing the natural gas needed for market Supply: marketing; purchasing natural gas Transmission: transmitting; pipeline Distribution: businesses, households, customers etc.
Image of page 3
Image of page 4

You've reached the end of your free preview.

Want to read all 5 pages?

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture