产业终极版.docx

1、产业终极版Explanation of terms (名词解释)1. Industrial Organization (IO): the working of markets and industries, in particular the way firms compete with each other.2. Market power: is defined as the ability to set prices above cost, specifically above incremental or marginal cost.3. SCP paradigm: Structure:

2、 characteristics of the market. number of firms, distribution of market share, degree of product differentiation, entry conditions, Conduct: choices of firms. price, quantity, investments, service, quality. Performance: how firms do. price, consumer surplus, product variety, technological progress.4

3、. Specific assets: Once those investments are made, the resulting assets can be used only for the specific type for which they were created. 5. Nash equilibrium: A pair of strategies constitutes a Nash equilibrium if no player can unilaterally change its strategy in a way that improves its payoff.6.

4、 Dominant strategies: Whenever a player has a strategy that is strictly better than any other strategy regardless of the other players strategy choices, we say that the first player has a dominant strategy.7. Elasticity rule: A monopolist produces the level of output that marginal revenue equals mar

5、ginal cost (profit-maximization).8. Oligopoly: The situation in which there are a few competitors is designated by oligopoly (duopoly双寡头垄断if the number is two).9. Collusion: Firms attempt to establish agreements between themselves with a view toward increasing their market power, then all firms are

6、better off (normally at the expense of consumers). 10. Two-part tariffs: a fixed part f, which each consumer must pay regardless of quantity purchased, and a variable part p, proportional to the quantity purchased.11. Minimum efficient scale: is the lowest output level at which the minimum average c

7、ost is attained.12. Barriers to entry: Barriers to entry are obstacles that make it difficult to enter a given market. Barriers to entry protect a firm from the arrival of new competitors. Short answer questions（简答）1、What factors decides the degree of market power?答： The degree of market power depen

8、ds on three factors: (1) demand elasticity, (2) market concentration, and (3) collusive behavior.2、What are reasons that management cannot deviate from profit maximization too large? 答：Management incentive contracts; Labor market discipline; Product market discipline Capital market discipline.3、Duop

9、oly is an intermediate market structure, between monopoly and perfect competition. Compare equilibrium price and output under duopoly with those under monopoly and perfect competition? 答：Duopoly output is greater than monopoly output and lower than perfect competition output. Likewise, duopoly price

10、 is lower than monopoly price and greater than price under perfect competition. 4、Why is the degree of monopoly power limited by the elasticity of demand? 答：The demand elasticity depends on many factorssome static, some dynamic. This makes it difficult to judge the extent of monopoly power in actual

11、 situations. 5、When is predatory pricing likely to be a successful strategy? 答：Predatory pricing may be a successful strategy when (1) the prey is financially constrained, (2) low prices signal low costs or the predators “toughness,” and (3) capturing a minimum market share early on is crucial for l

12、ong-term survival. In all these cases, low pricing by the predator induces the prey to exit the market.6、Many firms set a price for the export market that is lower than the price for the domestic market. How can you explain this policy?答：Third-degree (三级): The seller divides buyers into groups, sett

13、ing a different price for each group. Under third-degree price discrimination, a seller should charge a lower price in those market segments with greater price elasticity.7、A nearby pizza parlor offers pizzas in three sizes: small, medium and large. Its corresponding prices are $6, $8, and $10. Do t

14、hese data indicate that the firm is price discriminating? Why or why not?答：Price discrimination is the practice of setting different prices for the same good. Price discrimination occurs when the price differences is not justified by the cost differences. We cannot definitely say that the pizza parl

15、or is price discriminating since we dont have enough data about cost or size of pizza.以下 内容为答案的解释说明，为帮助理解，不必背Extra: Suppose marginal cost of pizza per 100g (or 100 oz) is the same regardless of size. And suppose further than the size of medium pizza is 33% greater than small pizza but 25% smaller th

16、an large pizza. Then since the markups across the size are the same, this is not the case of price discriminating. But we dont have enough information.8、 When do vertical restraints such as reseal-price maintenance or exclusive territories may increase efficiency? 答：Vertical restrains such as resale

17、 maintenance or exclusive territories may increase efficiency when (1) retailers make investments in sales effort that benefit several retailers or rival manufacturers; or (2) a two-part tariffs is insufficient to simultaneously provide incentives for retail pricing and sales effort.9、 Briefly expla

18、in Dorfman-Steiner formula. 答：Where is the demand elasticity with respect to advertising expenditures and the price elasticity of demand. The advertising-to-sales ratio is greater the advertising elasticity of demand and the lower the price elasticity of demand (or the greater the price-cost margin)

19、.Graph（作图）1、Compare the long-run equilibrium of monopolistically competitive and purely competitive industries. Show this on the graph. （图的内容一样，只是文字解释部分不同，注重看解释）2、There is a monopoly manufacturer and a monopoly retailer. Demand for the retail product is p = 9 Q. Marginal cost of the manufacturer is

20、constant and equal to c = 3. The manufacturer charges the retailer a uniform wholesale price r. -Retailers demand for the manufacturers product r (Q);-Profit-maximizing quantity for the manufacturer Q;-Wholesale price r;-Retail price p;-If retailer and manufacturer were maximizing their joint profit

21、s, they choose to produce QM. （以上答案仅为画图部分，文字分析说明自己总结，参见ppt60-62）Problems（答案部分无，自己多看看老师给的PPT）1. The Battle of the Sexes is a two-player coordination game used in game theory. Imagine a couple that agreed to meet this evening, but cannot recall if they will be attending the opera or a football match.

22、The husband would most of all like to go to the football game. The wife would like to go to the opera. Both would prefer to go to the same place rather than different ones. The payoff matrix below is an example of Battle of the Sexes, where the wife chooses a row and the husband chooses a column.-Do

23、es either player have a dominant strategy? Why or why not? -Does either player have a dominated strategy? Why or why not? -Determine all equilibrium outcomes. Verify that the equilibrium outcomes are Nash equilibria of the game（Using the definition of Nash equilibrium） 2. Suppose two firms play the

24、grim strategy. You are asked to calculate the minimal discount factor under which the grim strategies form a Nash Equilibrium and collusion can be sustained in every period. 答案是第41张ppt内容3. Algebraic derivation of Cournot equilibrium prices and outputs Inverse demand : P(Q)=a-bQ, Cost: C(q)=cq, where

25、 q is the firms output total output : Q=q1+q2Monopoly equilibrium: Perfect competition equilibrium: p=c答案是35，3,3张PPT答：（1）ppt上给出的题目条件应为 Demand function: q =a bp（注意是需求函数）, cost function C(q)=cq.此时Monopoly equilibrium（注意这里是对价格求导，而非产量）（2）如果题目条件是P(Q)=a-bQ （逆需求函数）Cost: C(q)=cq, 此时Monopoly equilibrium（注意这里

26、是对产量求导）同理，依据上述方法，可分别计算出完全垄断，完全竞争和古诺双寡头垄断三种市场结构条件下的均衡产量和价格如下表：产量价格垄断完全竞争c古诺双头模型4 A monopolist serves two markets, 1 and 2. The demand curve in market 1 is given by q1 = 1 p1; the demand curve in market 2 is q2 = 2 p2. No marginal and transportation costs. Suppose that a third degree price discriminat

27、ion is allowed. What are the equilibrium prices and quantities in each market? Suppose now that price discrimination is not allowed. Compute the equilibrium price and quantities in the two markets. 答：(1) Under the thrid type-price discrmination, the monopolist charges different prices to different a

28、lthough clearly identifiable - groups of consumers. In particolar, in market 1, it solves the following maximization problem:They yield the equilibrium price and quantity in market 1, under the third type-price discrimination: Through analogous reasoning, in market 2, we find: (2) If price discrimin

29、ation is not allowed, and both markets are served, a uniform price is set in both regions. The monopolist solves the following maximization problem:From which, we find: 5 An ice cream maker has to decide what types of ice cream to sell and at what prices. The customers who buy ice cream have differe

30、nt tastes x for fat content, with x ranging from 1/4 to 5/4. For each x, there is an equal number of customers with taste x. If x is the customers most preferred fat content, and the ice cream has fat content z, then customer x is willing to pay2 0.8 |x z|for this ice cream. The marginal cost of pro

31、ducing an ice cream with any fat content is c = 0.4. Assume that the manufacturer always serves the whole market.If the manufacturer is free to offer any two types of ice cream, what will be their optimal locations in terms of fat content and what will be the profit maximizing prices?Suppose that du

32、e to a fashion for low fat foods, customer tastes (addresses) unexpectedly shift from the interval 1/4, 5/4 to the interval 0, 1. For these new tastes, determine the profit-maximizing prices for the product line that you found in part (a). Continue to assume that the manufacturer serves all the market.If it costs F = 5 per product to adapt the product to the change in tastes (i.e.