PPT-Price-Output Determination under Price Leadership by the Dominant Firm

PREPARED BY ANINDITA CHAKRAVARTY We now proceed to explain the determination of price and output when there exists price leadership by a dominant firm which is having a large share of the market with a number of small firms as followers each of which has a small share of the market . TRADITIONAL MODELS OF IMPERFECT COMPETITION. 2. 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. Theory of The Firm. Learning Objectives . Describe using examples, the assumed characteristics of the perfectly competitive market.. Explain, using a diagram the shape of the PC’s AR, MR, MC.. Explain, using a diagram, that it is possible for PC markets to make economic, normal and negative profit in the short-run based on MC and MR rule. . the Competitive Process. 5. 22. 3. 9. Price Takers . and Price Searchers. Price Takers and Price Searchers. Price takers. produce identical products . (for example. , wheat, corn, soybeans) and because the firms are small relative to the market each must take the price established in the market.. with . High Entry Barriers. Why are Entry Barriers. Sometimes High?. Entry Barriers. A few examples of factors that may serve as ‘. barriers. ’ . to free . entry into a market:. economies of scale. the Competitive Process. Price Takers . and Price Searchers. Price Takers and Price Searchers. Price takers . produce identical products . (. for example, wheat, corn, soybeans) and because the firms are small relative to the market each must take the price established in the market.. Competition. U. nit Overview. Assumptions. of the Perfectly Competitive Model. Large. number of sellers. Homogeneous product. No entry barriers. Perfect information. Profit Maximization in the Short-run. Pure (or Perfect). Competition. Pure Monopoly. Number of Firms. VERY large number of firms. Only ONE firm. The firm IS the industry. Price making abilities of individual firms. Each firm is so small that changes in its own output do not affect market price, i.e. firms are price takers. Broad topic aims.. Explain consumer equilibrium. Describe producer equilibrium. Discuss . the short run and long run cost curves. Describe the various market structures. Concept of utility . What is utility?. Oligopoly: Firms in Less Competitive Markets. Copyright © 2017 Pearson Education, Inc. All Rights Reserved. Chapter Outline. 14.1 . Oligopoly and Barriers to Entry. 14.2 . Game Theory and Oligopoly. Hwk. (Chap 14) due by midnight. Mon 3/5: Assignment/Quiz 6. Tues 3/6: Online . Hwk. (Chap 15) due by midnight. Economics. 6. th. edition. Chapter 14. Oligopoly: Firms in Less Competitive Markets. Copyright © 2017 Pearson Education, Inc. All Rights Reserved. UNEMPLOYMENT 909 the relatively lucky firms do not increase employment more than they would if their workers had perfect information while the unlucky firms decrease employment more than they would if 1. 8. .1 Dominant-Firm Price Leadership Model. 25 June 2019. 2. 8. .1.1 Sources of Dominance. Few industries are truly monopolies. . In . practice, it is much more common to find industries in which there is a . Leadership . Prepared by. ANINDITA CHAKRAVARTY. Economists have developed various models concerning price-output determination under price leadership making different assumptions about the . behaviour. Duna Jogeswar Rao. Price & Output Determination under perfect Competition. Under perfect competition, the buyers and sellers cannot influence the market price by increasing or decreasing their purchases or output, respectively. The market price...