北大微观经济学课件(英文版)Ch24Monopoly

ChapterTwenty-FourMonopoly2025/1/29中级微观经济学PureMonopolyAmonopolizedmarkethasasingleseller.Themonopolist’sdemandcurveisthe(downwardsloping)marketdemandcurve.Sothemonopolistcanalterthemarketpricebyadjustingitsoutputlevel.2025/1/29中级微观经济学PureMonopolyOutputLevel,y$/outputunitp(y)Higheroutputycausesa

lowermarketprice,p(y).2025/1/29中级微观经济学WhyMonopolies?Whatcausesmonopolies?alegalfiat;e.g.USPostalService2025/1/29中级微观经济学WhyMonopolies?Whatcausesmonopolies?alegalfiat;e.g.USPostalServiceapatent;e.g.anewdrug2025/1/29中级微观经济学WhyMonopolies?Whatcausesmonopolies?alegalfiat;e.g.USPostalServiceapatent;e.g.anewdrugsoleownershipofaresource;e.g.atollhighway2025/1/29中级微观经济学WhyMonopolies?Whatcausesmonopolies?alegalfiat;e.g.USPostalServiceapatent;e.g.anewdrugsoleownershipofaresource;e.g.atollhighwayformationofacartel;e.g.OPEC2025/1/29中级微观经济学WhyMonopolies?Whatcausesmonopolies?alegalfiat;e.g.USPostalServiceapatent;e.g.anewdrugsoleownershipofaresource;e.g.atollhighwayformationofacartel;e.g.OPEClargeeconomiesofscale;e.g.localutilitycompanies.2025/1/29中级微观经济学PureMonopolySupposethatthemonopolistseekstomaximizeitseconomicprofit,

Whatoutputlevely*maximizesprofit?2025/1/29中级微观经济学Profit-MaximizationAttheprofit-maximizingoutputlevely*so,fory=y*,2025/1/29中级微观经济学y$R(y)=p(y)yProfit-Maximization2025/1/29中级微观经济学$R(y)=p(y)yc(y)Profit-Maximizationy2025/1/29中级微观经济学Profit-Maximization$R(y)=p(y)yc(y)yP(y)2025/1/29中级微观经济学Profit-Maximization$R(y)=p(y)yc(y)yP(y)y*2025/1/29中级微观经济学Profit-Maximization$R(y)=p(y)yc(y)yP(y)y*2025/1/29中级微观经济学Profit-Maximization$R(y)=p(y)yc(y)yP(y)y*2025/1/29中级微观经济学Profit-Maximization$R(y)=p(y)yc(y)yP(y)y*Attheprofit-maximizing

outputleveltheslopesoftherevenueandtotalcost

curvesareequal;MR(y*)=MC(y*).2025/1/29中级微观经济学MarginalRevenueMarginalrevenueistherate-of-changeofrevenueastheoutputlevelyincreases;2025/1/29中级微观经济学MarginalRevenueMarginalrevenueistherate-of-changeofrevenueastheoutputlevelyincreases;dp(y)/dyistheslopeofthemarketinverse

demandfunctionsodp(y)/dy<0.Thereforefory>0.2025/1/29中级微观经济学MarginalRevenueE.g.ifp(y)=a-bythenR(y)=p(y)y=ay-by2andsoMR(y)=a-2by<a-by=p(y)fory>0.2025/1/29中级微观经济学MarginalRevenueE.g.ifp(y)=a-bythenR(y)=p(y)y=ay-by2andsoMR(y)=a-2by<a-by=p(y)fory>0.p(y)=a-byaya/bMR(y)=a-2bya/2b2025/1/29中级微观经济学MarginalCostMarginalcostistherate-of-changeoftotal

costastheoutputlevelyincreases;E.g.ifc(y)=F+ay+by2then2025/1/29中级微观经济学MarginalCostFyyc(y)=F+ay+by2$MC(y)=a+2by$/outputunita2025/1/29中级微观经济学Profit-Maximization;AnExampleAttheprofit-maximizingoutputlevely*,

MR(y*)=MC(y*).Soifp(y)=a-byand

c(y)=F+ay+by2then2025/1/29中级微观经济学Profit-Maximization;AnExampleAttheprofit-maximizingoutputlevely*,

MR(y*)=MC(y*).Soifp(y)=a-byandif

c(y)=F+ay+by2thenandtheprofit-maximizingoutputlevelis2025/1/29中级微观经济学Profit-Maximization;AnExampleAttheprofit-maximizingoutputlevely*,

MR(y*)=MC(y*).Soifp(y)=a-byandif

c(y)=F+ay+by2thenandtheprofit-maximizingoutputleveliscausingthemarketpricetobe2025/1/29中级微观经济学Profit-Maximization;AnExample$/outputunityMC(y)=a+2byp(y)=a-byMR(y)=a-2byaa2025/1/29中级微观经济学Profit-Maximization;AnExample$/outputunityMC(y)=a+2byp(y)=a-byMR(y)=a-2byaa2025/1/29中级微观经济学Profit-Maximization;AnExample$/outputunityMC(y)=a+2byp(y)=a-byMR(y)=a-2byaa2025/1/29中级微观经济学MonopolisticPricing&Own-PriceElasticityofDemandSupposethatmarketdemandbecomeslesssensitivetochangesinprice(i.e.theown-priceelasticityofdemandbecomeslessnegative).Doesthemonopolistexploitthisbycausingthemarketpricetorise?2025/1/29中级微观经济学MonopolisticPricing&Own-PriceElasticityofDemand2025/1/29中级微观经济学MonopolisticPricing&Own-PriceElasticityofDemandOwn-priceelasticityofdemandis2025/1/29中级微观经济学MonopolisticPricing&Own-PriceElasticityofDemandOwn-priceelasticityofdemandisso2025/1/29中级微观经济学MonopolisticPricing&Own-PriceElasticityofDemandSupposethemonopolist’smarginalcostof

productionisconstant,at$k/outputunit.

Foraprofit-maximumwhichis2025/1/29中级微观经济学MonopolisticPricing&Own-PriceElasticityofDemandE.g.ife=-3thenp(y*)=3k/2,

andife=-2thenp(y*)=2k.

Soaserisestowards-1themonopolist

altersitsoutputleveltomakethemarket

priceofitsproducttorise.2025/1/29中级微观经济学MonopolisticPricing&Own-PriceElasticityofDemandNoticethat,since2025/1/29中级微观经济学MonopolisticPricing&Own-PriceElasticityofDemandNoticethat,since2025/1/29中级微观经济学MonopolisticPricing&Own-PriceElasticityofDemandNoticethat,sinceThatis,2025/1/29中级微观经济学MonopolisticPricing&Own-PriceElasticityofDemandNoticethat,sinceThatis,2025/1/29中级微观经济学MonopolisticPricing&Own-PriceElasticityofDemandNoticethat,sinceThatis,Soaprofit-maximizingmonopolistalways

selectsanoutputlevelforwhichmarket

demandisown-priceelastic.2025/1/29中级微观经济学MarkupPricingMarkuppricing:Outputpriceisthemarginalcostofproductionplusa“markup.”Howbigisamonopolist’smarkupandhowdoesitchangewiththeown-priceelasticityofdemand?2025/1/29中级微观经济学MarkupPricingisthemonopolist’sprice.2025/1/29中级微观经济学MarkupPricingisthemonopolist’sprice.Themarkupis2025/1/29中级微观经济学MarkupPricingisthemonopolist’sprice.ThemarkupisE.g.ife=-3thenthemarkupisk/2,

andife=-2thenthemarkupisk.

Themarkuprisesastheown-price

elasticityofdemandrisestowards-1.2025/1/29中级微观经济学AProfitsTaxLeviedonaMonopolyAprofitstaxleviedatratetreducesprofitfromP(y*)to(1-t)P(y*).Q:Howisafter-taxprofit,(1-t)P(y*),maximized?2025/1/29中级微观经济学AProfitsTaxLeviedonaMonopolyAprofitstaxleviedatratetreducesprofitfromP(y*)to(1-t)P(y*).Q:Howisafter-taxprofit,(1-t)P(y*),maximized?A:Bymaximizingbefore-taxprofit,P(y*).2025/1/29中级微观经济学AProfitsTaxLeviedonaMonopolyAprofitstaxleviedatratetreducesprofitfromP(y*)to(1-t)P(y*).Q:Howisafter-taxprofit,(1-t)P(y*),maximized?A:Bymaximizingbefore-taxprofit,P(y*).Soaprofitstaxhasnoeffectonthemonopolist’schoicesofoutputlevel,outputprice,ordemandsforinputs.I.e.theprofitstaxisaneutraltax.2025/1/29中级微观经济学QuantityTaxLeviedonaMonopolistAquantitytaxof$t/outputunitraisesthemarginalcostofproductionby$t.Sothetaxreducestheprofit-maximizingoutputlevel,causesthemarketpricetorise,andinputdemandstofall.Thequantitytaxisdistortionary.2025/1/29中级微观经济学QuantityTaxLeviedonaMonopolist$/outputunityMC(y)p(y)MR(y)y*p(y*)2025/1/29中级微观经济学QuantityTaxLeviedonaMonopolist$/outputunityMC(y)p(y)MR(y)MC(y)+tty*p(y*)2025/1/29中级微观经济学QuantityTaxLeviedonaMonopolist$/outputunityMC(y)p(y)MR(y)MC(y)+tty*p(y*)ytp(yt)2025/1/29中级微观经济学QuantityTaxLeviedonaMonopolist$/outputunityMC(y)p(y)MR(y)MC(y)+tty*p(y*)ytp(yt)Thequantitytaxcausesadrop

intheoutputlevel,ariseinthe

output’spriceandadeclineindemandforinputs.2025/1/29中级微观经济学QuantityTaxLeviedonaMonopolistCanamonopolist“pass”allofa$tquantitytaxtotheconsumers?Supposethemarginalcostofproductionisconstantat$k/outputunit.Withnotax,themonopolist’spriceis2025/1/29中级微观经济学QuantityTaxLeviedonaMonopolistThetaxincreasesmarginalcostto$(k+t)/outputunit,changingtheprofit-maximizingpriceto

Theamountofthetaxpaidbybuyersis2025/1/29中级微观经济学QuantityTaxLeviedonaMonopolististheamountofthetaxpassedonto

buyers.E.g.ife=-2,theamountof

thetaxpassedonis2t.

Becausee<-1,e/(1+e)>1andsothe

monopolistpassesontoconsumersmore

thanthetax!2025/1/29中级微观经济学TheInefficiencyofMonopolyAmarketisParetoefficientifitachievesthemaximumpossibletotalgains-to-trade.OtherwiseamarketisParetoinefficient.2025/1/29中级微观经济学TheInefficiencyofMonopoly$/outputunityMC(y)p(y)yep(ye)Theefficientoutputlevel

yesatisfiesp(y)=MC(y).2025/1/29中级微观经济学TheInefficiencyofMonopoly$/outputunityMC(y)p(y)yep(ye)Theefficientoutputlevel

yesatisfiesp(y)=MC(y).CS2025/1/29中级微观经济学TheInefficiencyofMonopoly$/outputunityMC(y)p(y)yep(ye)Theefficientoutputlevel

yesatisfiesp(y)=MC(y).CSPS2025/1/29中级微观经济学TheInefficiencyofMonopoly$/outputunityMC(y)p(y)yep(ye)Theefficientoutputlevel

yesatisfiesp(y)=MC(y).

Totalgains-to-tradeis

maximized.CSPS2025/1/29中级微观经济学TheInefficiencyofMonopoly$/outputunityMC(y)p(y)MR(y)y*p(y*)2025/1/29中级微观经济学TheInefficiencyofMonopoly$/outputunityMC(y)p(y)MR(y)y*p(y*)CS2025/1/29中级微观经济学TheInefficiencyofMonopoly$/outputunityMC(y)p(y)MR(y)y*p(y*)CSPS2025/1/29中级微观经济学TheInefficiencyofMonopoly$/outputunityMC(y)p(y)MR(y)y*p(y*)CSPS2025/1/29中级微观经济学TheInefficiencyofMonopoly$/outputunityMC(y)p(y)MR(y)y*p(y*)CSPS2025/1/29中级微观经济学TheInefficiencyofMonopoly$/outputunityMC(y)p(y)MR(y)y*p(y*)CSPSMC(y*+1)<p(y*+1)soboth

sellerandbuyercouldgain

ifthe(y*+1)thunitofoutput

wasproduced.Hencethe

market

isParetoinefficient.

2025/1/29中级微观经济学TheInefficiencyofMonopoly$/outputunityMC(y)p(y)MR(y)y*p(y*)DWLDeadweightlossmeasuresthegains-to-tradenotachievedbythemarket.2025/1/29中级微观经济学TheInefficiencyofMonopoly$/outputunityMC(y)p(y)MR(y)y*p(y*)yep(ye)DWLThemonopolistproduceslessthantheefficientquantity,makingthemarketpriceexceedthe

efficientmarket

price.2025/1/29中级微观经济学NaturalMonopolyAnaturalmonopolyariseswhenthefirm’stechnologyhaseconomies-of-scalelargeenoughforittosupplythewholemarketataloweraveragetotalproductioncostthanispossiblewithmorethanonefirminthemarket.2025/1/29中级微观经济学NaturalMonopolyy$/outputunitATC(y)MC(y)p(y)2025/1/29中级微观经济学NaturalMonopolyy$/outputunitATC(y)MC(y)p(y)y*MR(y)p(y*)2025/1/29中级微观经济学EntryDeterrencebyaNaturalMonopolyAnaturalmonopolydetersentrybythreateningpredatorypricingagainstanentrant.Apredatorypriceisalowpricesetbytheincumbentfirmwhenanentrantappears,causingtheentrant’seconomicprofitstobenegativeandinducingitsexit.2025/1/29中级微观经济学EntryDeterrencebyaNaturalMonopolyE.g.supposeanentrantinitiallycapturesone-quarterofthemarket,leavingtheincumbentfirmtheotherthree-quarters.2025/1/29中级微观经济学EntryDeterrencebyaNaturalMonopolyy$/outputunitATC(y)MC(y)DIDEp(y),totaldemand=DI+DE2025/1/29中级微观经济学EntryDeterrencebyaNaturalMonopolyy$/outputunitATC(y)MC(y)DIDEpEp(y*)Anentrantcanundercutthe

incumbent’spricep(y*)but...p(y),totaldemand=DI+DE2025/1/29中级微观经济学EntryDeterrencebyaNaturalMonopolyy$/outputunitATC(y)MC(y)p(y),totaldemand=DI+DEDIDEpEpIp(y*)Anentrantcanundercutthe

incumbent’spricep(y*)buttheincumbentcanthen

loweritspriceasfar

aspI,forcing

theentrant

toexit.2025/1/29中级微观经济学InefficiencyofaNaturalMonopolistLikeanyprofit-maximizingmonopolist,thenaturalmonopo