麦圭根管理经济学（第十版）英文课件ch11.ppt

Monopoly and Dominant Firms Chapter 11 Monopoly conjures images of huge profits, great wealth, and indiscriminate power, labeled robber barons. But some monopolies are not very profitable Others dominate their industry Still others are regulated by State Public Service or Utility Commissions, and may have very low rates of return on invested capital. Regulated monopolies are known as utilities. Sources of Market Power for a Monopolist Legal restrictions -- copyrights patents. Control of critical resources creates market power. Government-authorized franchises, such as provided to cable TV companies. Economies of size allow larger firms to produce at lower cost than smaller firms. Brand loyalty and extensive advertising makes entry highly expensive. Increasing returns in network-based businesses - compatibilities increase market penetration. What Went Wrong With Apple? Apple tried to pursue increasing returns by trying to be the industry standard Tried to protect is graphical interface code (GIC) from infringement Lead to Apple being less compatible with software being developed Microsoft recognized and became the industry standard Monopoly is a single seller where entry is prohibited and there are no close substitutes 1. FIRM = INDUSTRY 2. MR P Find the monopoly quantity if: P = 100 - Q, and where MC = 20. Answer this by starting where MR = MC TR = P?Q = 100?Q - Q2 MR = 100 - 2?Q = 20 80 = 2?Q QM = 40 Find Monopoly Price: PM = 100 - 40 = 60 The Importance of Price Elasticity of Demand for a Monopoly Optimal Markups The optimal markup can be found using this same formula. P = [ED /( ED+1)]?MC. The optimal markup m is: (1+m) = [ED /( ED+1)] For example, if ED = -3, the markup is 50%, since = [-3/( -3 +1)] = 1.5. If ED = -4, the markup is 33.3%, since his is where [-4/( -4 +1)] = 1.333. If the price elasticity is infinite, the markup is zero. This occurs in competition. Find the Monopoly Price in these Problems P[ 1 + 1/( - 3) ] = 100 P[ 2/3