微观经济学16寡头垄断课件

1、Chapter 16OligopolyImperfect competition refers to those market structures that fall between perfect competition and pure monopoly.Imperfect competition includes industries in which firms have competitors but do not face so much competition that they are price taker.Between Monopoly and Perfect comp

2、etitionType of Imperfectly Competitive Markets OligopolyOnly a few sellers, each offering a similar or identical product to the others. Monopolistic CompetitionMany firms selling products that are similar but not identical.16.1 Between Monopoly and Perfect competitionFigure 1 The Four Types of Marke

3、t StructureCopyright 2004 South-Western Tap water Cable TVMonopoly(Chapter 15) Novels MoviesMonopolisticCompetition(Chapter 17) Tennis balls Crude oilOligopoly(Chapter 16)Number of Firms?Perfect Wheat MilkCompetition(Chapter 14)Type of Products?IdenticalproductsDifferentiatedproductsOnefirmFewfirmsM

4、anyfirmsStructureNumber of producers and degree of product differentiation Part of economy where prevalent Firms degree of control over price Methods of marketing Perfect competition Many producers; Identical products Financial markets;agricultural markets None Market exchange or auction Monopolisti

5、c competition Many producers;Many real or perceived differences in products Retail trade (pizzas, beer, gas-station); personal computerssomeAdvertising and quality rivalry; administered prices oligopoly Few producers; little or no difference in product Steel;Chemicals;aircraft Few producers; Product

6、s are differentiated Cars; Word-processing software; household appliancesMonopoly Single producer; product without close substitutesFranchise monopolies (electricity,water); Microsoft windows; patent drugsConsiderableAdvertising;service promotion CountryJoined OPECLocationAlgeria1969AfricaAngola2007

7、AfricaIndonesia1962AsiaIR Iran*1960Middle EastIraq*1960Middle EastKuwait*1960Middle EastSP Libyan AJ1962AfricaNigeria1971AfricaQatar1961Middle EastSaudi Arabia*1960Middle EastUnited Arab Emirates1967Middle EastVenezuela*1960South America*founder Members (/library/FAQs/aboutOPEC/q3.htm)Because an oli

8、gopolistic market has only a small group of sellers, the key feature of oligopoly is the tension between cooperation and self-interest. The group of oligopolists is best off cooperating and acting like a monopolist - producing a small quantity of output and charging a price above marginal cost. Yet

9、because each oligopolist cares about only its own profit, there are powerful incentives at work that hinder a group of firms from maintaining the monopoly outcome. (Mankiw, Principles of Economics(2004), third edition, p347)16.2 Markets With Only A Few SellersCharacteristics of an Oligopoly MarketFe

10、w sellers offering similar or identical productsInterdependent firmsBest off cooperating and acting like a monopolist by producing a small quantity of output and charging a price above marginal cost16.2 Markets With Only A Few SellersA duopoly is an oligopoly with two members. It is the simplest typ

11、e of oligopoly.16.2.1 A Duopoly ExamplePrice and Quantity SuppliedThe price of water in a perfectly competitive market would be driven to where the marginal cost is zero:P = MC = $0Q = 120 gallonsThe price and quantity in a monopoly market would be where total profit is maximized:P = $60Q = 60 gallo

12、ns16.2.1 A Duopoly ExamplePrice and Quantity SuppliedThe socially efficient quantity of water is 120 gallons, but a monopolist would produce only 60 gallons of water:So what outcome then could be expected from duopolists?16.2.1 A Duopoly ExampleThe duopolists may agree on a monopoly outcome. Collusi

13、on合谋An agreement among firms in a market about quantities to produce or prices to charge. Cartel卡特尔A group of firms acting in unison.16.2.2 Competition, Monopolies, and CartelsAlthough oligopolists would like to form cartels and earn monopoly profits, often that is not possible. Antitrust laws prohi

14、bit explicit agreement among oligopolists as matter of public policy. 16.2.2 Competition, Monopolies, and CartelsA Nash equilibrium(纳什均衡) is a situation in which economic actors interacting with one another each choose their best strategy given the strategies that all the others have chosen. 16.2.3

15、The Equilibrium for an Oligopoly When firms in an oligopoly individually choose production to maximize profit, they produce quantity of output greater than the level produced by monopoly and less than the level produced by competition.The oligopoly price is less than the monopoly price but greater t

16、han the competitive price (which equals marginal cost).16.2.3 The Equilibrium for an Oligopoly Possible outcome if oligopoly firms pursue their own self-interests:Joint output is greater than the monopoly quantity but less than the competitive industry quantity.Market price are lower than the monopo

17、ly price but greater than the competitive industry price.Total profits are less than the monopoly profit. 16.2.3 Equilibrium for an Oligopoly 16.2.4 How the Size of an Oligopoly Affects the Market OutcomeHow increasing the number of sellers affects the price and quantity:The output effect: Because p

18、rice is above marginal cost, selling more at the going price raises profits. (First it sells more output and receives a revenue of py from that.)The price effect: Raising production will increase the amount sold, which will lower the price and the profit per unit on all units sold. (second, the mono

19、polist, pushes the price down by p and it gets this lower price on all the output it has been selling.)r = p y + y p16.2.4 How the Size of an Oligopoly Affects the Market OutcomeAs the number of sellers in an oligopoly grows larger, an oligopolistic market looks more and more like a competitive mark

20、et.The price approaches marginal cost, and the quantity produced approaches the socially efficient level.16.3 Game Theory and The Economics Of Cooperation Game theory is the study of how people behave in strategic situations.“Strategic” decisions are those in which each person, in deciding what acti

21、ons to take, must consider how others might respond to that action.Because the number of firms in an oligopolistic market is small, each firm must act strategically.Each firm knows that its profit depends not only on how much it produces but also on how much the other firms produce.16.3 Game Theory

22、and The Economics Of CooperationGame theory is not necessary for understanding competitive or monopoly markets. In a competitive market, each firm is so small compared to the market that strategic interactions with other firms are not important. In a monopolized market, strategic interactions are ab

23、sent because the market has only one firm. But game theory is quite useful for understanding the behavior of oligopolies.16.3.1 The Prisoners DilemmaA particularly important “game” is called the prisoners dilemma. The prisoners dilemma provides insight into the difficulty in maintaining cooperation.

24、 Many times in life, people(firms) fail to cooperate with one another even when cooperation would make them better off.Figure 2 The Prisoners DilemmaCopyright2003 Southwestern/Thomson LearningBonnie s DecisionConfessConfessBonnie gets 8 yearsClyde gets 8 yearsBonnie gets 20 yearsClyde goes freeBonni

25、e goes freeClyde gets 20 yearsgets 1 yearBonnie Clyde gets 1 yearRemain SilentRemainSilentClydesDecisionThe prisoners dilemma is a particular “game” between two captured prisoners that illustrates why cooperation is difficult to maintain even when it is mutually beneficial.(Mankiw, 3th edition, p355

26、-356.)Lets call them Bonnie and Clyde. The police have enough evidence to convict Bonnie and Clyde of the minor crime of carrying an unregistered gun, so that each would spend a year in jail. The police also suspect that the two criminals have committed a bank robbery together, but they lack hard ev

27、idence to convict them of this major crime. The police question Bonnie and Clyde in separate rooms, and they offer each of them the following deal:“Right now, we can lock you up for 1 year. If you confess to the bank robbery and implicate涉及 your partner, however, well give you immunity and you can g

28、o free. Your partner will get 20 years in jail. But if you both confess to the crime, we wont need your testimony and we can avoid the cost of a trial, so you will each get an intermediate sentence of 8 years. ”If Bonnie and Clyde, heartless bank robbers that they are, care only about their own sent

29、ences, what would you expect them to do? Would they confess or remain silent? Figure 2 shows their choices. Each prisoner has two strategies: confess or remain silent. The sentence each prisoner gets depends on the strategy he or she chooses and the strategy chosen by his or her partner in crime.Con

30、sider first Bonnies decision. She reasons as follows:”I dont know what Clyde is going to do. If he remains silent, my best strategy is to confess, since then Ill go free rather than spending a year in jail. If he confesses, my best strategy is still to confess, since then Ill spend 8 years in jail r

31、ather than 20. So, regardless of what Clyde does, I am better off confessing.”In the language of game theory, a strategy is called a dominant strategy if it is the best strategy for a player to follow regardless of the strategies pursued by other players. In this case, confessing is a dominant strat

32、egy for Bonnie, She spends less time in jail if she confesses, regardless of whether Clyde confesses or remains silent.Now consider Clydes decision. He faces exactly the same choices as Bonnie, and he reasons in much the same way. Regardless of what Bonnie does, Clyde can reduce his time in jail by

33、confessing. In other words, confessing is also a dominant strategy for Clyde.In the end, both Bonnie and Clyde confess, and both spend 8 years in jail. Yet, from their standpoint, this is a terrible outcome. If they had both remained silent, both of them would have been better off, spending only 1 y

34、ear in jail on the gun charge. By each pursuing his or her own interests. The two prisoners together reach an outcome that is worse for each of them.16.3.1 The Prisoners DilemmaThe dominant strategy is the best strategy for a player to follow regardless of the strategies chosen by the other players.

35、Cooperation is difficult to maintain, because cooperation is not in the best interest of the individual player.16.3.1 The Prisoners DilemmaThere are two players. Both can choose between cooperating( C ) and finking (F). If they both cooperate. They both obtain 3. If they both fink, they both obtain

36、0. If one cooperates and the other finks, they get 1 and 4, respectively. In the one-shot version of this game, finking is a dominant strategy for both players. That is , each player gains from finking, regardless of the other players choice. Hence, the only Nash equilibrium is (F, F).(Jean Tirole,

37、The Theory of Industrial Organization, chapter6, p258.)Fink: n. 向警方通报罪犯情况的人Player 1Player 2CooperatingCooperatingFinkingFinking33- 14- 1400The Prisoners DilemmaFigure 3 An Oligopoly GameCopyright2003 Southwestern/Thomson LearningIraqs DecisionHigh ProductionHigh ProductionIraq gets $40 billionIran g

38、ets $40 billionIraq gets $30 billionIran gets $60 billionIraq gets $60 billionIran gets $30 billionIraq gets $50 billionIran gets $50 billionLow ProductionLowProductionIransDecisionConsider an oligopoly with two members, called Iran and Iraq. Both countries sell crude oil. After prolonged negotiatio

39、n, the countries agree to keep oil production low in order to keep the world price of oil high. After they agree on production levels, each country must decide whether to cooperate and live up to this agreement or to ignore it and produce at a higher level. Figure 3 shows how the profits of the two

40、countries depend on the strategies they choose.16.3.2 Oligopolies as a Prisoners DilemmaSuppose you are the president of Iraq. You might reason as follows: “I could keep production low as we agreed, or I could raise my production and sell more oil on world markets. If Iran lives up to the agreement

41、and keeps its production low, then my country earns profit of $60 billion with high production and $50 billion with low production. In this case, Iraq is better off with high production. If Iran fails to live up to the agreement and produces at a high level, then my country earns $40 billion with hi

42、gh production and $30 billion with low production. Once again, Iraq is better off with high production. So, regardless of what Iran chooses to do, my country is better off reneging on our agreement and producing at a high level.”16.3.2 Oligopolies as a Prisoners DilemmaProducing at a high level is a

43、 dominant strategy for Iraq. Of course, Iran reasons in exactly the same way, and so both countries produce at a high level. The result is the inferior outcome with low profits for each country.This example illustrates why oligopolies have trouble maintaining monopoly profits. The monopoly outcome i

44、s jointly rational for the oligopoly, but each oligopolist has an incentive to cheat. Self-interest makes it difficult for the oligopoly to maintain a cooperative outcome with low production, high prices, and monopoly profits.16.3.2 Oligopolies as a Prisoners DilemmaFigure 4 An Arms-Race GameCopyrig

45、ht2003 Southwestern/Thomson LearningDecision of the United States (U.S.)ArmArmU.S. at riskUSSR at riskU.S. at risk and weakUSSR safe and powerfulU.S. safe and powerfulUSSR at risk and weakU.S. safeUSSR safeDisarmDisarmDecision of the Soviet Union (USSR)When two firms advertise to attract the same cu

46、stomers, they face a problem similar to the prisoners dilemma. For example, consider the decisions facing two cigarette companies, Marlboro and Camel. If neither company advertises, the two companies split the market. If both advertise, they again split the market, but profits are lower, since each

47、company must bear the cost of advertising. Yet if one company advertises while the other does not, the one that advertises attracts customers from the other. AdvertisingFigure 5 An Advertising GameCopyright2003 Southwestern/Thomson LearningMarlboro s Decision AdvertiseAdvertiseMarlboro gets $3billio

48、n profitCamel gets $3billion profitCamel gets $5billion profitMarlboro gets $2billion profitCamel gets $2billion profitMarlboro gets $5billion profitCamel gets $4billion profitMarlboro gets $4billion profitDont AdvertiseDontAdvertiseCamelsDecisionFigure 5 shows how the profits of the two companies d

49、epend on their actions. You can see that advertising is a dominant strategy for each firm. Thus, both firms choose to advertise, even though both firms would be better off if neither firm advertised.A test of this theory of advertising occurred in 1971, when Congress passed a law banning cigarette a

50、dvertisements on television. To the surprise of many observers, cigarette companies did not use their considerable political clout to oppose the law. When the law went into effect, cigarette advertising fell, and the profits of cigarette companies rose. The law did for the cigarette companies what t

51、hey could not do on their own: It solved the prisoners dilemma by enforcing the cooperative outcome with low advertising and high profit.Figure 6 A Common-Resource GameCopyright2003 Southwestern/Thomson LearningExxons Decision Drill TwoWellsDrill Two WellsExxon gets $4million profitTexaco gets $4mil

52、lion profitTexaco gets $6million profitExxon gets $3million profitTexaco gets $3million profitExxon gets $6million profitTexaco gets $5million profitExxon gets $5million profitDrill One WellDrill OneWellTexacosDecision16.3.4 Prisoners Dilemma and the Welfare of SocietyIn some cases, the noncooperati

53、ve equilibrium is bad for society as well as the players. In the arms-race game in Figure 4, both the U.S. and the Soviet Union end up at risk. In the common-resources game in Figure 6, the extra wells dug by Texaco and Exxon are pure waste. In both cases, society would be better off if the two play

54、ers could reach the cooperative outcome.By contrast, in the case of oligopolists trying to maintain monopoly profits, lack of cooperation is desirable from the standpoint of society as a whole. The monopoly outcome is good for the oligopolists, but it is bad for the consumers of the product. The com

55、petitive outcome is best for society because it maximizes total surplus. When oligopolists fail to cooperate, the quantity they produce is closer to this optimal level. Put differently, the invisible hand guides markets to allocate resources efficiently only when markets are competitive, and markets

56、 are competitive only when firms in the market fail to cooperate with one another.16.3.4Prisoners Dilemma and the Welfare of SocietySimilarly, consider the case of the police questioning two suspects. Lack of cooperation between the suspects is desirable, for it allows the police to convict more cri

57、minals. The prisoners dilemma is a dilemma for the prisoners, but it can be a boon to everyone else.Boon: n. thing that one is thankful for, benefit, advantage所感激的事，利益，好处；Boon:adv. (idm) a boon companion好友16.3.5 Why People Sometimes CooperateFirms that care about future profits will cooperate in rep

58、eated games rather than cheating in a single game to achieve a one-time gain.The threat of this penalty may be all that is needed to maintain cooperation. Each person knows that defecting would raise his profit form $1800 to $2000. But this benefit would last for only one week. Thereafter, profit wo

59、uld fall to $1600 and stay there. As long as the players care enough about future profits, they will choose to forgo the one-time gain from defection. Thus, in a game of repeated prisoners dilemma, the two players may well be able to reach the cooperative outcome.Figure 7 Jack and Jill Oligopoly Gam

60、eCopyright2003 Southwestern/Thomson LearningJacks Decision Sell 40GallonsSell 40 GallonsJack gets$1,600 profitJill gets$1,600 profitJill gets$2,000 profitJack gets$1,500 profitJill gets$1,500 profitJack gets$2,000 profitJill gets$1,800 profitJack gets$1,800 profitSell 30 GallonsSell 30GallonsJillsDe