POL S 204 Study Guide - Quiz Guide: Herfindahl Index, Disruptive Innovation, Switching Barriers
Document Summary
Improve bargaining position w suppliers or retailers: double marginalization: market power both upstream and downstream. Better off if i combine forces to increase supply. Why have two marketing departments: b/c you want to have market power and reduce quantity, raise prices, increase rents. Us antitrust policy: industry concentration, market share, monopoly profits, herfindahl index, lerner index, ease and likelihood of entry (network effects, switching costs, are there close substitutes, cross-elasticity of demand. Cross-elasticity of demand: if a firm is merging w a comp that"s a close sub = bad (too much, ftc: does comparative stat analysis of markets have too much. What are ways to increase profits through product innovation: introduce new products (creative destruction, innovating drastically to make old products obsolete (replacement effect: dominate market in new products, happens a lot in hypercompetitive markets. 2: creative destruction light (don"t replace incumbents, improve quality: vertical dimension/price premium (luxury, introduce new features to horizontally differentiate products, some market power b/c choices.
