ECON 103 Lecture Notes - Lecture 21: Demand Curve, Marginal Cost, Marginal Revenue
18 Aug 2018
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Chapter 11: price-searcher markets with high entry barriers. There are four reasons for the barriers to entry to be high. Economies of scale: when a firm faces declining atc over the entire range of output that consumers are willing to buy, we call this economies of scale. Quotas - limit the quantity of imports government franchise firms pay to operate radio, cable or tv stations: must have permission from govt to use the airwaves, oldest, most effective way of restricting competition. Costs unfortunately there are costs to the patent system. The main cost of the patent system is that it limits competition. If one person has the sole right to produce revolutionary can-openers other firms cannot legally produce revolutionary can-openers. Monopoly : a market structure characterized by: exists when there is one firm selling a well-defined product for which there is no good substitute in a market that has high barriers to entry.
