ECON 20 Lecture Notes - Lecture 8: Price Of Oil
19 May 2020
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How is it like a perfect vacuum? (110min) Competition is a force that tends to bring us towards eq. Looking for ways to attract business from you. Like a perfect vacuum because it"s pc, already assumed away all uncertainties: can you add back the frictions you assumed and still have the model work or will you have to throw the model away, ex. If you want to talk about barriers to entry, gotta throw away the comp model because there aren"t any in that model. Yes, no matter how many firms there are it"s about how you market, not how many firms there are because not everyone"s there at the same time: ex. Smaller stores owners there, trust self to price discriminate, but move to bigger store like walmart, posted prices in stores because owner can"t be there to price discriminate, can"t trust others to do it either.
