ECON-101 Lecture Notes - Lecture 15: Predatory Pricing, Pharmaceutical Industry, Tylenol (Brand)
30 Mar 2016
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Document Summary
Learn why some markets have only one seller. Analyze how a monopoly determines the quanity to produce and the price to charge. See how the monopoly"s decisions afect economic well-being. See why monopolies try to charge diferent prices to diferent customers. Consider the various public policies aimed at solving the problem of monopoly. One producer (seller) of a product that has no close subsitute. Monopoly determines its own price (price searcher) Barriers to entry: (page 320) why monopolies arise: ownership of all the l. r, ex. 1 for 17 years had a monopoly, ater 17 years the formula became public informaion. Lots of small/medium sized pharmaceuical companies that wait for patents to expire to manufacture a product. J&j modiied the product (tylenol 2) and the cycle coninues: licences. Licences are given to areas thus by default a monopoly. In order for a irm to maximize its proit the rule: mr = mc.
