Kosmas Marinakis,
Ph.D.
Tying
Tying is when the seller requires the customer to
purchase one good in order to purchase another
Lecture 8
IBM mainframe and computer cards
PlayStation and game discs
Monopoly Pricing part III
Allows firm to measure/estim

Lab Problem Set 4
Pricing with Market Power
This problem set is intended to support the presentation by your teacher in the class. You are not required
to submit written solutions to this problem set. It is highly recommended that you work on these proble

Homework 5
Due October 28 Turn in before the exam in piles by the number of group
Homework must be submitted in the lecture on the due day. Submissions in any other way or time will be ignored with no
exceptions. Your name and your group number must be cl

Lab Problem Set 3
Market Power
This problem set is intended to support the presentation by your teacher in the class. You are not required
to submit written solutions to this problem set. It is highly recommended that you work on these problems
at home si

Homework 1
Due September 21 Turn in AFTER the end of the lecture in piles by the number of group
Homework must be submitted in the lecture on the due day. Submissions in any other way or time will be ignored with no
exceptions. Your name and your group nu

Lab Problem Set 5
MC and Oligopoly
This problem set is intended to support the presentation by your teacher in the class. You are not required
to submit written solutions to this problem set. It is highly recommended that you work on these problems
at hom

Lab Problem Set 1
Cost for Markets
This problem set is intended to support the presentation by your teacher in the class. You are not required to submit
written solutions to this problem set. It is highly recommended that you work on these problems at hom

Lab Problem Set 6
Game Theory
This problem set is intended to support the presentation by your teacher in the class. You are not required
to submit written solutions to this problem set. It is highly recommended that you work on these problems
at home sin

Homework 2
Due September 30 Turn in AFTER the end of the lecture in piles by the number of group
Homework must be submitted in the lecture on the due day. Submissions in any other way or time will be ignored with no
exceptions. Your name and your group nu

Kosmas Marinakis, Ph.D.
Example Bertrand with Differentiation
Firms face symmetric demand curves
10 2
10 2
Lecture 11
Monopolistic Competition
and Oligopoly part III
1
Marginal cost for both firms is
Reaction functions become
12
4
1
3
,
2
Equilibr

Kosmas Marinakis,
Ph.D.
Review of Perfect Competition
Assumptions
1. Large number of buyers and sellers
Lecture 3
2. Homogenous product
3. No barriers
Market Power part I
Zero Market Power
Price taking
Microeconomics
module III
Review of Perfect Com

Kosmas Marinakis, Ph.D.
Introduction
Without market power
Pricing is determined by market supply and demand
Producer must forecast the market conditions
Lecture 6
Then, must concentrate on managing production (cost) to
maximize profits
Monopoly Pricin

Kosmas Marinakis, Ph.D.
The Cournot Duopoly (1838)
Two firms produce a homogeneous good
Lecture 10
They simultaneously decide how much to produce
Monopolistic Competition
and Oligopoly part II
Each will adjust its quantity based on what it thinks
the o

Kosmas Marinakis,
Ph.D.
Modeling
There are no perfectly competitive markets out
there
Lecture 9
There are no pure monopolies, either
Monopolistic Competition
and Oligopoly part I
Then why do we consider such models?
This is a good question!
Microecono

Kosmas Marinakis,
Ph.D.
Rock Scissors Paper
Player A
Player B
Lecture 13
Game Theory part II
Rock
Scissors
Paper
Rock
0,0
1 , -1
-1 , 1
Scissors
-1 , 1
0,0
1 , -1
Paper
1 , -1
-1 , 1
0,0
There is no NE in pure strategies
There is no combination of strate

Kosmas Marinakis, Ph.D.
Intention of this Lecture
This lecture intents to remind you important aspects
of cost analysis suitable for the study of markets
Lecture 1
Cost, as a notion, is very important for the
equilibrium of a market
Cost Concepts
for Ma

Kosmas Marinakis,
Ph.D.
Games
Game is any situation in which players (the
participants) make strategic decisions
Lecture 12
For example
Firms competing with each other by setting prices,
Game Theory part I
Individuals bidding against each other in an a

Kosmas Marinakis,
Ph.D.
Supply Curve in Monopoly
In PC, the market supply curve is determined by
marginal cost
Lecture 4
Market Power part II
For a monopoly, output is determined by marginal
cost and the shape of the demand curve
There is no supply curve

Kosmas Marinakis, Ph.D.
Second-Degree Price Discrimination
Under the second-degree price discrimination the
firm offers different options of quantity or variety of
the product
Lecture 7
Again groups of consumers are formed
Monopoly Pricing part II
Accor

Kosmas Marinakis, Ph.D.
Basic Assumptions of PC
A market is perfectly competitive when
1. Firms are so many that they do not affect each-other
Lecture 2
2. Product is homogeneous
3. Entry and exit are free
The Analysis of PC
Microeconomics
module III
201

Kosmas Marinakis, Ph.D.
Efficiency of Monopoly
Market power results in higher prices and lower
quantities
However, does market power make consumers and
producers in the aggregate better or worse off?
Lecture 5
Market Power part III
We can compare produ