Positive Externalities notes
Positive externalities are the other side of the coin. Positive
externalities are beneficialside effects that selfish agents don't
factor into their decisions.
IO example: beauty products.
Markets for Research and Development notes
R&D and the Free-Rider Problem
A. But where do falling costs (as well as new products, which we will consider
next week) come from? What makes them fall?
B. For the most part, because someone figured out a better
Government as a Cause of Monopoly notes
Russia. Peter the Great set up numerous government
monopolies. Resin, potash, rhubarb, glue, salt, tobacco,
vodka, chalk, tar, fish, cards, dice, and even coffi
Sherman Act (1890)
"Restraint of trade"
"Monopolization" and "attempted monopolization"
Clayton Act (1914)
Singles out business practices "where the effect may be to
substantially lessen competitio
Markets for Variety and Quality notes
Product Variety and Product Quality
Only recently have researchers begun to fully appreciate the fact
that product quality is an important component of consumer
welfare. The computers, cars, food, and other product
Narrow definition (not mine): economic analysis of the
competitiveness of markets, with a strong focus on the use of
antitrust policy to improve market performance
Broad definition (mine): economic analysi
Negative Externalities notes
Many choices have costly side effects that selfish agents do not
factor into their decisions. Economists call these costly side
effects "negative externalities."
Clearest-cut case: theft.
Preconceptions about Monopoly
When most people today think about "monopoly," they think
about firms gaining a dominant position in an unregulated free
Standard Oil & Rockefeller
Problem: Might not
Why does non-job-related schooling still raise your
income? ("What does this have to do with real life?")
Why won't people buy goods without a warrantee?
Why do you use nice paper on a job application?
Why do you (
Collusion and Predation notes
Do firms actually compete with each other? Maybe they
conspire with each other to keep prices high and output
low. Business conspiracies of this sort are usually called
Open collusion: F