现代经济学 第十章.pptVIP

* * The first example, “ad wars,” is not mentioned in the textbook. An interesting note: When Congress banned cigarette advertising on television in 1971, cigarette manufacturers’ profits rose. Prior to the ban, cigarette companies were stuck in a Nash equilibrium in which all were spending heavily on TV ads to steal business from each other. The ban, in effect, forced cigarette manufacturers to switch to the cooperative outcome in which none advertises on TV. The next three examples (OPEC on this slide, arms race common resources on the next slide) are discussed in much more detail in the textbook. Instead of covering these same examples in detail in this PowerPoint, I chose to present different examples, so that students who read the book still have a reason to attend class (and vice versa). However, it’s still useful to mention the book’s examples here, and briefly discuss them if you wish, so they will be familiar to students when students read the chapter. * * In the arms race “game,” each of the superpowers would be better off if they could cooperate and sign an agreement to disarm. But the logic of self-interest dictates that each country will arm itself to the teeth. As a result, both countries are worse off for two reasons: 1) The risk of nuclear annihilation is higher. 2) Resources consumed in the arms race could have been used elsewhere. The following slide presents another example in which the inability to cooperate reduces social welfare. * * If you’re so inclined, this might be a good place to mention the infamous phone call in which Robert Crandall, CEO of American Airlines, tried to convince Braniff’s CEO Howard Putnam to raise fares 20%. If you can dig up a transcript of the conversation to read in class (try a simple Google search), students will find it interesting: it has lots of curse words. * * As I prepare this PowerPoint, I am shopping for a home theater sound system. My experience is relevant to this slide, and st