ECON 20 Lecture Notes - Lecture 1: Perfect Competition, Product Differentiation, Price Discrimination
19 May 2020
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Standard models: pc, monopoly: pick one variable, assume everything else is standardized, magically sells itself at eq price, only variable you pick is quantity produced. Price wars you can force it down, but you can"t push it back up so there"s more risk. Ways that"ll be harder for other people to imitate. Organized exchange no disagreements in the firm because everything"s standardized, nothing to disagree about, all you choose is q. It"s a way to make supply and demand look scientific. When not in an org. exchange, people have different opinions. Here are the assumptions, we derive supply and demand from them because we. In perfect market, price change is instantaneous, where others can match immediately, knew it worked but in the real world, not true. Can"t cut price unless you have monopoly power. In pc model, never advertise, but doesn"t that mean you"re a monopoly because. Why no barriers to entry in org. exchange world? you"re not competing: ex.
