public monopoly presentation
TRANSCRIPT
Monopoly (Chapter 15)Presentation byIsmail Ali andJessica Zhang
A Bad ExampleYou know those handouts other groups printed and gave out? We did that too. On the handouts are URLs that we think will help you study for the Econ final. Thing is, we've got money in mind. A handout costs $1. Be quick, though. We've only printed ten copies.
Gotcha!Just kidding. We actually gave a few of you money to buy those handouts. The democratization of information that may have just followed is what happens over a much longer timespan in real monopolies. If you've succumbed to groupthink and bought one without us asking beforehand, let us know and we'll return it.
Summary•What is a monopoly?•What enables a monopoly?•Monopoly vs. Perfect Competition (and price discrimination)•Monopolies and welfare•Monopoly and public policy
So, what is a Monopoly?"A firm is a monopoly if it is the sole seller of its product and if its product does not have close substitutes."
Translation: The only seller of a product that hasn't been duplicated
Barriers, Barriers, BarriersMonopolies exist because of one
thing: Barriers.
Barriers come in three flavors1. Key resource for just one firm2. The guv'ment3. Costs of production=efficiency
Monopoly vs. Perfect Competition, Part I
Monopoly•Just one firm•Marginal Revenue > Price (Goodbye, Mr. Darp)•Price > MC•Not welfare-maximizing•No entry•Long-run profits possible•Price discrimination doable•Price maker
Monopoly vs. Perfect Competition, Part II
Perfect Competition•Many firms•Marginal Revenue = Price•Price = MC•Welfare-maximizing•Easy entry•Long-run profits impossible•Price discrimination not doable•Price taker
Monopoly vs. Perfect Competition, Part III
Both•Goal: Maximize profit$ (Awwww, yeaaaah)
•Profit Maximization where Marginal Revenue = Marginal Cost
•Short-run profits possible
Monopoly vs. Perfect Competition, Part IV
Price Discrimination•Not possible for perfect competition
•(Market power is a must)•Solves deadweight loss
•Eliminates inefficiencyExamples: movie tickets, financial aid, quantity discounts
What does a Monopoly do for Welfare?
In short,•Benefit Monopolists (high producer surplus)•Does not maximize total economic well being like competitive markets
Government and Monopoly("Democratizing Monopolies")
Governments can:•Make the market more competitive•Regulate monopoly behavior•Take control (public ownership)•Do zilch
The EndThe URLs are studyforecon.wordpress.com and _______.
They're on Facebook as well.