第9章独占

How is monopoly different from perfect competition?

What is a barrier to entry? Give some examples.

What is a natural monopoly?

What is a legal monopoly?

What is predatory pricing?

How is intellectual property different from other property?

What legal mechanisms protect intellectual property?

In what sense is a natural monopoly “natural”?

ALCOA does not have the monopoly power it once had. How do you suppose their barriers to entry were weakened?

Why are generic pharmaceuticals significantly cheaper than name brand ones?

For many years, the Justice Department has tried to break up large firms like IBM, Microsoft, and most recently Google, on the grounds that their large market share made them essentially monopolies. In a global market, where U.S. firms compete with firms from other countries, would this policy make the same sense as it might in a purely domestic context?

Intellectual property laws are intended to promote innovation, but some economists, such as Michele Boldrin and David K. Levine, have argued that such laws are not desirable. In the United States, there is no intellectual property protection for food recipes or for fashion designs. Considering the state of these two industries, and bearing in mind the discussion of the inefficiency of monopolies, can you think of any reasons why intellectual property laws might hinder innovation in some cases?

Return to Figure 9.2. Suppose P₀ is $10 and P₁ is $11. Suppose a new firm with the same LRAC curve as the incumbent tries to break into the market by selling 4,000 units of output. Estimate from the graph what the new firm’s average cost of producing output would be. If the incumbent continues to produce 6,000 units, how much output would the two firms supply to the market? Estimate what would happen to the market price as a result of the supply of both the incumbent firm and the new entrant. Approximately how much profit would each firm earn?