ECO101H1 Lecture 19: Oligopoly and Monopolistic Competition
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ECO101H1 Full Course Notes
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Eco100 - lecture 18 : oligopoly and monopolistic competition. Real life example - international cartel: potash (fertilizer) Cartel breaks down as russian member chooses to expand output, lowering monopoly price. Oligopolists who were previously competing form a cartel: True or f : if the government imposes a price ceiling at the price that would prevail under perfect competition, a monopolist will increase its output (in spite of the lower price) to perfectly competitive level. Break up illegal cartels, punish firms (financial and legal penalties) Oligopolists try to fix prices (form a cartel/collude to monopoly pricing), which is illegal, governments will try to punish. Fine art auctions: oligopoly (s and c are 95% of market) Earn revenues: buyer"s pay commision (20%) to house, seller"s pay commision (10%) to house. Art seller: force auction houses to compete c sells for 8%, s may sell for 6% Prior to 1995, s and c would compete by lowering seller"s commissions.
