ECON 101 Chapter Notes - Winter 2018 Chapter 11 - Nash equilibrium, Pareto efficiency, Decision-making

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20 Sep 2018
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ECON 101 Full Course Notes
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Imperfect competition: rivalrous behavior, with same market power to set prices within a range. Structures of imperfect competition: monopolistic competition: large number of small firms leaning towards perfect competition, oligopoly: smaller number of large firms, leaning towards monopoly. Note that there can be both price and non-price competition (quality, services, etc. ) Industrial concentration ratio: fraction of total market (sales, shipments, etc. ) that is controlled by a given number of the largest firms. Cr4: % of sales by top 4 firms. The higher the cr, the greater the market power. Market sales: top firms may hold majority of market, but may also compete with each other if they control same or similar % Behaviors of imperfect competition: selection of product. Firms want to differentiate products to make them distinguished to consumers compared to competition; branding. Not perfect substitutes: selection of prices. Administered prices: prices set by individual form in a range around market equilibrium price referenced by demand and supply.

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