THE PARTIAL EQUILIBRIUM COMPETITIVE MODEL(局部均衡竞争模型)尼科尔森中级微观ppt

– long run
• new firms may enter an industry
13
Pricing in the Very Short Run
• In the very short run (or the market period), there is no supply response to changing market conditions
– the amount supplied by each firm depends on price
• The short-run market supply curve will be upward-sloping because each firm’s short-run supply curve has a positive slope
18
Short-Run Market Supply Curve
To derive the market supply curve, we sum the quantities supplied at every price
P Firm A’s supply curve
sA
P
sB
Firm B’s supply curve
px* x1
x2
X
x1*
x
x2*
x
X*
x
x1* + x2* = X*
4
Shifts in the Market Demand Curve
• The market demand summarizes the ceteris paribus relationship between X and px
– changes in px result in movements along the curve (change in quantity demanded)
– very short run
• no supply response (quantity supplied is fixed)
– short run
• existing firms can alter their quantity supplied, but no new firms can enter the industry
3
Market Demand
To derive the market demand curve, we sum the quantities demanded at every price
px Individual 1’s demand curve px Individual 2’s demand curve px Market demand curve
P Market supply curve
S
P1
q1A
quantity
q1B
quantity
Q1
Quantity
q1A + q1B = Q1
19
Short-Run Market Supply Function
• The short-run market supply function shows total quantity supplied by each firm to a market
7
Shifts in Market Demand
• If py rises to 6, the market demand curve shifts outward to X = 27 – 3px + 4 + 1 + 6 = 38 – 3px
– note that X and Y are substitutes
eQ,I QD (P, P ' , I ) I I QD
12
Timing of the Supply Response
• In the analysis of competitive pricing, the time period under consideration is important
11
Elasticity of Market Demand
• The cross-price elasticity of market demand is measured by
eQ,P QD (P, P ' , I ) P ' P ' QD
• The income elasticity of market demand is measured by
– changes in other determinants of the demand for X cause the demand curve to shift to a new position (change in demand)
5
Shifts in Market Demand
• Suppose that individual 1’s demand for oranges is given by x1 = 10 – 2px + 0.1I1 + 0.5py
9
Generalizations
• The market demand function for xi is the sum of each individual’s demand for that good
X i xij ( p1,..., pn , I j )
j 1 m
• The market demand function depends on the prices of all goods and the incomes and preferences of all buyers
– price acts only as a device to ration demand
• price will adjust to clear the market
– the supply curve is a vertical line
14
Pricing in the Very Short Run
Price
S
When quantity is fixed in the very short run, price will rise from P1 to P2 when the demand rises from D to D’
P2
P1 D’ D
Q*
Quantity
15
Short-Run Price Determination
• If I1 fell to 30 while I2 rose to 30, the market demand would shift inward to X = 27 – 3px + 3 + 1.5 + 4 = 35.5 – 3px
– note that X is a normal good for both buyers
• The number of firms in an industry is fixed • These firms are able to adjust the quantity they are producing
– they can do this by altering the levels of the variable inputs they employ
and individual 2’s demand is x2 = 17 – px + 0.05I2 + 0.5py • The market demand curve is X = x1 + x2 = 27 – 3px + 0.1I1 + 0.05I2 + py
6
Shifts in Market Demand
8
Generalizations
• Suppose that there are n goods (xi, i = 1,n) with prices pi, i = 1,n. • Assume that there are m individuals in the economy
• The j th’s demand for the i th good will depend on all prices and on Ij xij = xij(p1,…,pn, Ij)
16
Perfect Competition
• A perfectly competitive industry is one that obeys the following assumptions:
– there are a large number of firms, each producing the same homogeneous product – each firm attempts to maximize profits – each firm is a price taker
10
Elasticity of Market Demand
• The price elasticity of market demand is measured by
eQ,P QD (P, P ' , I ) P P QD
• Market demand is characterized by whether demand is elastic (eQ,P <-1) or inelastic (0> eQ,P > -1)
• To graph the demand curve, we must assume values for py, I1, and I2 • If py = 4, I1 = 40, and I2 = 20, the market demand curve becomes X = 27 – 3px + 4 + 1 + 4 = 36 – 3px
Qs (P,v ,w ) qi (P,v ,w )
i 1 n
• Firms are assumed to face the same market price and the same prices for inputs
20
Short-Run Supply Elasticity
Market demand for X xi ( px , py , Ii )
i 1
2
n
பைடு நூலகம்
Market Demand
• To construct the market demand curve, PX is allowed to vary while Py and the income of each individual are held constant • If each individual’s demand for x is downward sloping, the market demand curve will also be downward sloping
• Assume that there are only two goods (x and y)
– An individual’s demand for x is
Quantity of x demanded = x(px,py,I) – If we use i to reflect each individual in the market, then the market demand curve is
Chapter 10
THE PARTIAL EQUILIBRIUM COMPETITIVE MODEL
Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved.
1
Market Demand
• its actions have no effect on the market price
– information is perfect – transactions are costless
17
Short-Run Market Supply
• The quantity of output supplied to the entire market in the short run is the sum of the quantities supplied by each firm