Class five

Natural Monopolies自然垄断
An industry is a natural monopoly when a single firm can supply a good or service to an entire market at a smaller cost than could two or more firms. 当一个企业能以低于两个或更 多企业的成本为整个市场供给一种物品或劳 务时，这个行业是自然垄断。
Quantity of Water
A Monopoly’s Marginal Revenue A monopolist’s marginal revenue边际收益 is always less than the price of its good.
The demand
线向下倾斜. When a monopoly drops the price to sell one more unit, the revenue received from previously sold units also decreases.
Monopoly 垄断
5
Monopoly
While a competitive firm is a price taker 价格执行者, a monopoly firm is a price maker价格制定者.
Monopoly
•
A firm is considered a monopoly if . . . it is the sole seller of its product产品唯 一的卖家. its product does not have close substitutes产品没有相近的替代品.
Competition versus Monopoly
Competitive Firm
Is one
of many producers Has a horizontal demand curve Is a price taker Sells as much or as little at same price
Why Monopolies Arise
The fundamental cause of monopoly is barriers to entry 进入壁垒.
Why Monopolies Arise
Barriers to entry have three sources:
• Ownership of a key resource (Monopoly Resources) 垄断资源. • The government gives a single firm the exclusive right to produce some good (Government-Created Monopoly) 政府创造的垄断. • Costs of production make a single producer more efficient than a large number of producers. (Natural Monopoly) 自然垄断
Demand Curves for Competitive and Monopoly Firms...
(a) A Competitive Firm’s Demand Curve
Price Price
(b) A Monopolist’s Demand Curve
Demand
Demand 0 Quantity of Output 0 Quantity of Output
Monopoly Resources
Although exclusive ownership of a key resource is a potential source of monopoly, in practice monopolies rarely 几乎不 arise for this reason.
The Monopolist’s Profit
The monopolist will receive economic profits as long as price is greater than average total cost.
The Welfare Cost of Monopoly
Government-Created Monopolies
Governments may restrict entry by giving a single firm the exclusive right to sell a particular good in certain markets. 政 府通过给予一个企业独家出售某种物品的权利，从而严格 控制某市场的进入（造成垄断）。
In contrast to a competitive firm, the monopoly charges a price above the marginal cost.
From the standpoint of consumers, this high price makes monopoly undesirable. However, from the standpoint of the owners of the firm, the high price makes monopoly very desirable.
• For a monopoly firm, price exceeds marginal cost.
P > MR = MC
A Monopoly’s Profit Profit equals total revenue minus total costs.
Profit = TR - TC Profit = (TR/Q - TC/Q) x Q Profit = (P - ATC) x Q
Cost
Average total cost
0
Quantity of Output
Monopoly versus Competition Monopoly
Is the
sole producer Has a downward-sloping demand curve Is a price maker Reduces price to increase sales
The Monopolist’s Profit...
Costs and Revenue Marginal cost Monopoly price E B Average total cost
Average total cost D
C Demand
Marginal revenue
0 QMAX Quantity
Government-Created Monopolies
Patent 专利and copyright laws版权法 are two important examples of how government creates a monopoly to serve the public interest.
curve is downward sloping 需求曲
A Monopoly’s Marginal Revenue When a monopoly increases the amount it sells, it has two effects on total revenue (P x Q).
A Monopoly’s Revenue
•
Total Revenue
P x Q = TR
•
Average Revenue
TR/Q = AR = P
•
Marginal Revenue
DTR/DQ = MR
A Monopoly’s Total, Average, and Marginal Revenue
Natural Monopolies
A natural monopoly arises when there are economies of scale over the relevant range of output. 当相关产量范围存在规模经济时，自 然垄断就产生了。
Economies of Scale as a Cause of Monopoly...
Profit-Maximization for a Monopoly...
Costs and Revenue 2. ...and then the demand curve shows the price consistent with this quantity. 1. The intersection of the marginal-revenue curve and the marginal-cost curve determines the profit-maximizing quantity... Average total cost A Demand
This wedge 楔子causes the quantity
sold
to fall short of the social optimum.
The Inefficiency of Monopoly...
The output
effect—more output is sold, so Q is higher. 产出效应 The price effect—price falls, so P is lower.价格效应
Profit Maximization of a Monopoly
• A monopoly maximizes profit by producing the quantity at which marginal revenue equals marginal cost. • It then uses the demand curve to find the price that will induce consumers to buy that quantity.