ECON 2G03 Lecture Notes - Lecture 5: Archer Daniels Midland, Demand Curve

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The number of firms in the market. If there are many firms, it is unlikely that any one firm will be able to affect price significantly: the interaction among firms. In each case, the elasticity of market demand limits the potential monopoly power of individual producers. The number of firms: when only a few firms account for most of the sales in a market, we say that the market is highly concentrated, barrier to entry- condition that impedes entry by new competitors. Rent seeking: spending money in socially unproductive efforts to acquire, maintain and exercise monopoly. Because adm has a near monopoly on corn-based ethanol production, so the regulation would increase its gains from monopoly power.

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