ECON 2000 Chapter : Chapter 13 Notes
Document Summary
Monopolies- (de)regulation: ideal market conditions, markets answer to what, how, and for whom to produce would be ideal if: People had full info about tastes, costs, prices. Costs and benefits were reflected in in market prices. Pervasive economies of scale were absent: market failure and gov. Intervention: market failure prevents optimal outcomes, gov intervenes in 2 ways: Antitrust: alter market structure or prevent abuse of market power (prohibit mergers/acquisitions) Regulation: alter behavior of firms (pricing, output or advertising: natural monopoly, an industry in which one firm can achieve economies of scale over entire range of market supply. 1 firm provides good at lower cost than several competing firms operates on downward-sloping atc curve has high fixed costs, large capital input, low mc ix. xi. xii. Profit regulation: requires production at qc , charging pc, at that point p=atc, at 0 economic profits, no subsidy needed, allows normal profit. Collecting info on demand and costs the industry.
