产业组织2_-_Market_Structure_and_Market_Power_Technology_and_Cost.pptVIP

Economies of Scope (1) Baumol, Panzar, and Willig (1982). It is less costly to produce a set of goods in one firm than it is to produce the set in two or more firms. Economies of Scope. C(q1,0) + C(0,q2) - C(q1,q2) 0 Diseconomies of Scope. C(q1,0) + C(0,q2) - C(q1,q2) 0 Neither Economies of Scope nor Diseconomies of Scope. C(q1,0) + C(0,q2) - C(q1,q2) = 0 Economies of Scope (2) Critical Point : Sc = 0. Sc 0 : Economies of Scope. Sc 0 : Diseconomies of Scope. Reasons for Economies of Scope Common Inputs. Such as, same equipments, shared advertising. Cost Complementarities. Producing one good reduces the production cost of other goods. Flexible Manufacturing “production unit(s) capable of producing a range of discrete products with a minimum of manual intervention”. Computer-assisted-manufacturing (CAM). Firms with economies of scope tend to exploit its powers. The presence of economies of scope tends to increase market concentration. Non-Cost Determinants of Industry Structure Size of the market. The presence of network externalities on the demand side. The role of government policy. The size of the market (1) Concentration tends to decline as the market size is getting larger. Sutton (1991, 2001) argues that sunk cost (F) is not fixed. It grows as the market size grows. The size of the market (2) Network Externalities Willingness to consume of consumers to the good is increasing as the number of consumers increases. Ex : Telephone, Microsoft Windows. The number of the firms in the industry tends to be smaller. Government Policy Policy which tends to increase the number of the firms. Antitrust laws. Policies which tend to decrease or to limit the number of the firms. Limiting Entry. Patent System. Cost Function – Economies of Scale (1) Optimization : Lagrange multiplier. Cost Function –Economies of Scale (2) For Cobb-Douglas Production Function, α + β 1 : Economies of Scale. α + β = 1 : Constant Returns to Scale. α + β 1 :