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Lecture 16

EC120 Lecture Notes - Lecture 16: Price Discrimination, Sasktel, Manitoba Hydro


Department
Economics
Course Code
EC120
Professor
All
Lecture
16

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
Chapter 15: Monopoly
 !"#$
% &'#((# (##"
Key dierence! ##$#""##$market
power, !$#)#
*""'# *
##barriers to entry
* #( #$
* ('##('+'((
,* Natural monopoly:#(##"
- .#'#/#
'#"#(MC<ATC at all Q
Natural entry barriers – natural monopoly
#$!0##
#1'#("'$'(#(!('
'#('
 ##$2##"# ###' 
#(minimum e#cient scale (MES)
3$#!1345#6+#$#17
+6 ##$###(8 9
.##!##":!##
#  
Monopoly vs. Compe**on Demand Curves
In a compe**ve market
% #' #*
% ;#$#'2<#
""' !""
% ##-  #(=""'
In a monopoly,
% ##$#'
% (-*.>!MR < P

Monopolists MR
##(-?#'#
* output eect: '#
* price eect: '#
(-###@
'#!#("'?+?
Pro0t maximiza*on
1""'#+<!$#(- MR = MC
###"-(# #($-
% #;'
 ""'pro0t = (P – ATC) x Q
#$
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