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1. Under what circumstances are economic profits a good indicator of market power? A poor indicator?
2. Explain why it is not possible to estimate the demand curve simply by fitting a line through annual observations on price and quantity.
Rather than look at the effect on the "competitiveness" of the dominant firm, should the Commission have not also considered the effect of the dominant firm's conduct on eff
Are these options likely sufficient to conclude that even if all theaters in a city are owned by one firm, that that firm will not be a monopolist? Under what circumstances
Although strategic investment can confer an advantage on the first mover, such investment also locks in the firm. Discuss how the value of flexibility would affect our analysi
Standard empirical analysis of learning by doing estimates a "progress ratio" that is the reduction in a firm's average costs. Write down an algebraic form of a cost function
Now suppose that w > 0. What additional types of strategic effects have been introduced into the game? In a reaction function diagram show the different strategic effects
There are learning economies, so that costs in the second period are a function of production in the first period. Will price be higher in the first or the second period?
If advertising has positive externalities that benefit the industry as a whole, is it possible for an incumbent to use advertising in a strategic manner to deter entry? Will
Show that a monopolist always advertises too much when measured by the yardstick of the preadvertising tastes. Show that the result also holds when measured by the yardstick
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