管理经济学13.ppt

Managerial Economics Business Strategy Chapter 13 A Manager’s Guide to Government in the Marketplace Overview I. Market Failure Market Power Externalities Public Goods Incomplete Information II. Rent Seeking III. Government Policy and International Markets Quotas Tariffs Regulations Market Power Firms with market power produce socially inefficient output levels. Too little output Price exceeds MC Deadweight loss Dollar value of society’s welfare loss Antitrust Policies Administered by the DOJ and FTC Market Concentration Herfindahl-Hirshman Index: HHI = 10,000 S wi2 Industries in which the HHI exceed 1800 are generally deemed “highly concentrated”. The DOJ or FTC may, in this case, attempt to block a merger if it would increase the HHI by more than 100. Sherman Act (1890) Sections 1 and 2 prohibits price-fixing, market sharing and other collusive practices designed to “monopolize, or attempt to monopolize” a market. Clayton Act (1914) Section 3 Prohibits exclusive dealing and tying arrangements where the effect may be to “substantially lessen competition.” Externalities A cost borne by people who neither produce nor consume the good. Example: Pollution Caused by the absence of well-defined property rights. Government regulations may induce the socially efficient level of output by forcing firms to internalize pollution costs The Clean Air Act of 1970 Public Goods A good that is nonrival and nonexclusionary in consumption. Nonrival: A good which when consumed by one person does not preclude other people from also consuming the good. Example: Radio signals, national defense Nonexclusionary: No one is excluded from consuming the good once it is provided. Example: Clean air “Free Rider” Problem Individuals have little incentive to buy a public good because of their nonrival nonexclusionary nature. Public Goods Incomplete Information Government serves as a provider of information to combat the inefficiencies caused by incomplete and/or asymmetric information