尼科尔森9版课件尼科尔森中级微观ppt ch14.pptVIP

Chapter 14 TRADITIONAL MODELS OF IMPERFECT COMPETITION Pricing Under Homogeneous Oligopoly We will assume that the market is perfectly competitive on the demand side there are many buyers, each of whom is a price taker We will assume that the good obeys the law of one price this assumption will be relaxed when product differentiation is discussed Pricing Under Homogeneous Oligopoly We will assume that there is a relatively small number of identical firms (n) we will initially start with n fixed, but later allow n to vary through entry and exit in response to firms’ profitability The output of each firm is qi (i=1,…,n) symmetry in costs across firms will usually require that these outputs are equal Pricing Under Homogeneous Oligopoly The inverse demand function for the good shows the price that buyers are willing to pay for any particular level of industry output P = f(Q) = f(q1+q2+…+qn) Each firm’s goal is to maximize profits ?i = f(Q)qi –Ci(qi) ?i = f(q1+q2+…qn)qi –Ci Oligopoly Pricing Models The quasi-competitive model assumes price-taking behavior by all firms P is treated as fixed The cartel model assumes that firms can collude perfectly in choosing industry output and P Oligopoly Pricing Models The Cournot model assumes that firm i treats firm j’s output as fixed in its decisions ?qj/?qi = 0 The conjectural variations model assumes that firm j’s output will respond to variations in firm i’s output ?qj/?qi ? 0 Quasi-Competitive Model Each firm is assumed to be a price taker The first-order condition for profit-maximization is ??i /?qi = P – (?Ci /?qi) = 0 P = MCi (qi) (i=1,…,n) Along with market demand, these n supply equations will ensure that this market ends up at the short-run competitive solution Quasi-Competitive Model Cartel Model The assumption of price-taking behavior may be inappropriate in oligopolistic industries each firm can recognize that its output decision will affect price An alternative assumption would be that firms act as a group and coor