Agenda Quiz on Current Reading “If a Cable Giant Becomes Bigger” Review of Monopolies Homework...
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Agenda •Quiz on Current Reading • “If a Cable Giant Becomes Bigger” •Review of Monopolies •Homework •Intro to Chapter 11 • Figure 11.1 •Test #2 • February 26 • Chapters 6-8, 10-11
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Transcript of Agenda Quiz on Current Reading “If a Cable Giant Becomes Bigger” Review of Monopolies Homework...
Agenda•Quiz on Current Reading
• “If a Cable Giant Becomes Bigger”•Review of Monopolies•Homework•Intro to Chapter 11
• Figure 11.1
•Test #2• February 26• Chapters 6-8, 10-11
Quiz
New York Times…”If a Cable Giant Becomes Bigger”
Overview of Industry Structures
Pure MonopolisticCompetition Competition Oligopoly
MonopolyCharacteristics
Number of Sellers Many Several Few One
ProductDifferentiation None Some More
???? (commodity)
Barriers to None Some More Total
Entry / Exit
Control of Price None Some Significant Total
GOAL
TOOLS
Where do businesses want to be?
Review Monopolies
Characteristics of a Monopoly
1.Single Seller / Producer
2.No Substitutes
3.Price Maker
4.Absolute Barriers to entry / exit
Monopolies
Types of Monopolies
1.Legal Monopoly – Patents
2.Geographic Monopolies – Public Schools
3.Natural Monopolies – Utilities
4.Technology - iPad
worksheet
another type of monopoly…low cost provider.
The Wal-Mart strategy
Monopolies
Price Discrimination…charging different prices to different groups
Expedia….are there really only x tickets left?
Monopolies
Price Discrimination…Characteristics Needed
1.Monopolistic Power (or at least Oligopolistic Power)
2.No Resale
3.Market Segregation / Customer Segregation
Monopolies
Price Discrimination…Examples
Airlines
Electricity
Hotels
College Education
HOMEWORK
Chapter 10Problems 1 & 2
Three Minute Break
Intro to Chapter 11
Oligopolies and Monopolistic Competition
Overview of Industry Structures
Pure MonopolisticCompetition Competition Oligopoly
MonopolyCharacteristics
Number of Sellers Many Several Few One
ProductDifferentiation None Some More
???? (commodity)
Barriers to None Some More Total
Entry / Exit
Control of Price None Some Significant Total
GOAL
TOOLS
Where do businesses want to be?
Intro to Chapter 11
Oligopolies and Monopolistic Competition
Why are 95% of industries in one of these categories?
Intro to Chapter 11
Oligopolies and Monopolistic Competition
Why are 95% of industries in one of these categories?
Because businesses move to the right toward monopoly and competition / regulation pushes businesses to the left.
Overview of Industry Structures
Pure MonopolisticCompetition Competition Oligopoly
MonopolyCharacteristics
Number of Sellers Many Several Few One
BUSINESSESProductDifferentiation None Some More
???? (commodity)
Barriers to None Some More Total
Entry / ExitCOMPETITION / REGULATION
Control of Price None Some Significant Total
GOAL
TOOLS
Where do businesses want to be?
MR = MC
Graph page 220
The Government’s Role
Chapter 11
Why does the government regulate an industry?
When do the regulators step in?
How regulators measure control of an industry?
Concentration Ratio
Page 218
40% is the magic number
Herfindahl Index
• Page 219
• It’s easier than it looks
Herfindahl Index
• Below 100 indicates a highly competitive.
• Below 1,500 indicates competitive.
• Between 1,500 and 2,500) indicates moderate concentration
• Above 2,500 indicates high concentration (oligopoly). Likely to be regulated
Chapter 11 questions
• Q. 2, 7, 8
Test #2
February 26
Chapters 6-8, 10-11
