Microeconomics 2011 chapter 10 微观经济 教材课程.ppt

* * * * * * Why do professional golfers/tennis players, etc get paid in prize money? Get your students to think about this question and to think about the idea of a rank tournament inside a firm. * * * * * * * * * * Limitations of Concentration Measures Barriers to Entry and Firm Turnover Could be highly concentrated but easy for new entry. No restrictions but the market size is small Market lacks profitable opportunities. If economic profits improve there will be new entries Markets and the Competitive Environment Limitations of Concentration Measures Market and Industry Correspondence Governments may classify each firm as being in a particular industry when measuring concentration However, the market is often narrower than industries (i.e., pharmaceuticals) Some companies make products that are sold in more than one market (or industry) and won’t be classified appropriately Some companies switch markets depending on profit opportunities (i.e., Apple and Google now in the smart phone market) Markets the Competitive Environment Markets and Firms Market Coordination Markets coordinate production. Chapter 3 explains how demand and supply coordinate the plans of buyers and sellers. Adjusting prices and making quantity demanded equal to the quantity supplied for each good and service Another type of market coordination is outsourcing Markets and Firms Market Coordination Outsourcing—buying parts or products from other firms—is an example of market coordination of production. Examples include Dell, GM, Apple, etc… How do firms decide whether to buy from another firm or manufacture the item themselves? The answer is cost. But firms coordinate more production than do markets. Why? Why Firms? Firms coordinate production when they can do so more efficiently than a market. Four key reasons might make firms more efficient. Firms can achieve Lower transactions costs Economies of scale Economies of scope Economies of team production (each member is specialized