大三上学习产业组织理论-62016.pptxVIP

产业组织理论Theory of Industrial Organization Lecture 6：Monopoly practices ;Outline;Concentration and definition of market;Concentration and definition of market;Sources of Dominance;Sources of Dominance;Pricing by a Dominant Firm;The dominant-firm price leadership model can be explained by using the steel industry as an example During the first half of the twentieth century, United States Steel (US Steel) was the dominant firm in the American steel industry, acting as the price leader for the smaller steel firms. The steel industry demand curve D is P = 100 - Q, the fringe’s supply curve Sf is P = 25 + 2qf , and the dominant firm’s marginal cost curve is MCu = 25 + (13)qu;In order to calculate US Steel’s profi t-maximizing price, we first find its residual demand curve by subtracting the fringe supply curve from the total demand curve at every price greater than P = $25. For example, if P = $75, total industry quantity demanded would equal 25 units, and the fringe would supply the entire industry demand of 25. At P = $75, therefore, the residual demand for US Steel would be zero. At P = $25, total industry quantity demanded would equal 75 units, and the fringe would supply zero. The residual demand for US Steel would then be 75 units. Similar calculations can be done to obtain US Steel’s residual demand for any price between $25 and $75. * These calculations yield the black linear residual demand curve connecting the two points (0, 75) and (75, 25). The equation of this demand curve is: P = 75 – 23qu for $25 ≤ P ≤ $75.;Derivation of the Dominant Firm’s Residual Demand Curve in the Dominant-Firm Price Leadership Model;The market demand for steel is given by P = 100 - Q. Because US Steel, the dominant firm, knows that the fringe firms’ supply curve is given by P = 25 + 2qf, it can calculate its residual demand by subtracting the fringe supply curve from the total demand curve for every price For prices below $25, the fringe firms supply no output, and the domina