ECON 20 Lecture Notes - Lecture 20: Harold Demsetz, Market Power
19 May 2020
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Harold demsetz, industry structure, market rivalry and public policy, journal of law and. Challenge to this idea that concentrated industries earn higher profits at the extent of consumers so we should bust them up to protect consumers. Bc people will try and imitate that success. But you don"t know what"s the source of that profit because it"s a complex team and until it gets capitalized, it"ll show higher profits. Especially in large firms with complex teams, you can have higher profits without leading to entrants to eroding because you don"t know how to make that secure: ex. Internal labor and idea markets: ex. During an interview you are misrepresenting how good you are and how good the firm is: have more accurate info if i can watch you in my firm. The standard result of the monopoly model is to raise prices and reduce output, harm consumers. This is a monopoly with one choice, how much to lower price.
