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McConnellMicro13_Ch12.ppt

Uploaded: 4 years ago
Contributor: Gorn
Category: Economics
Type: Other
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Filename:   McConnellMicro13_Ch12.ppt (1.6 MB)
Page Count: 12
Credit Cost: 3
Views: 23
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Transcript
PART 3 MICROECONOMICS OF PRODUCT MARKETS Prepared by Dr. Amy Peng Ryerson University © 2013 McGraw-Hill Ryerson Ltd. Describe what industrial concentration is, and how governments combat it. Discuss industrial regulation, and how governments deal with it. Discuss the nature of social regulation, and what its goals are. © 2013 McGraw-Hill Ryerson Ltd. Chapter 12 * Exists whenever a single firm or a small number of firms control the major portion of the output of an industry Competition Policy: Regulatory Agencies Competition Law Merger Types Competition Law 12.1 Industrial Concentration Horizontal merger Vertical merger Conglomerate merger © 2013 McGraw-Hill Ryerson Ltd. Chapter 12, LO1 * Price Fixing Price Discrimination Tying Contracts Recent Cases Issues of Enforcement: Tradeoffs Among Goals Balance of trade Emerging new technologies © 2013 McGraw-Hill Ryerson Ltd. Chapter 12, LO1 * Natural Monopoly: two possibilities for improving on outcomes Public ownership, e.g., Canada Post Public (industrial) regulation is the preferred option Public interest theory of regulation © 2013 McGraw-Hill Ryerson Ltd. Chapter 12, LO2 * Problems with Industrial Regulation Costs and Inefficiency Perpetuating Monopoly Legal Cartel Theory e.g., occupational licensing Deregulation A wave of deregulation has occurred since the 1970s: airlines, trucking, telecommunications, etc. Deregulation of the financial industry © 2013 McGraw-Hill Ryerson Ltd. Chapter 12, LO2 * The conditions under which goods and services are produced The impact of production on society The physical qualities of the goods © 2013 McGraw-Hill Ryerson Ltd. Chapter 12, LO3 * Distinguishing Features Applies to many firms Intrudes into day-to-day production process Has expanded rapidly The Optimum Level of Social Regulation Marginal Benefit (MB) = Marginal Cost (MC) © 2013 McGraw-Hill Ryerson Ltd. Chapter 12, LO3 * In Support of Social Regulation Notable successes Confronts serious problems Expensive but worthwhile Criticisms of Social Regulation MC > MB Laws poorly written, standards difficult to understand Overzealous regulators © 2013 McGraw-Hill Ryerson Ltd. Chapter 12, LO3 * Two Reminders “There is no free lunch” “Less government is not always better than more” © 2013 McGraw-Hill Ryerson Ltd. Chapter 12, LO3 * Charged May 1998 under the Sherman Act Accused of having a “Windows” monopoly District court findings: Used anticompetitive means District court remedy Appeals court ruling Final settlement © 2013 McGraw-Hill Ryerson Ltd. Chapter 12 * 12.1 Industrial Concentration Types of mergers The Competition Act 12.2 Industrial Regulation The objective and criticisms of industrial regulation 12.3 Social Regulation MB = MC © 2013 McGraw-Hill Ryerson Ltd. Chapter 12 *

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