Define sunk costs-fixed costs-economies of scale, Macroeconomics

Assignment Help:

Address the following issues concerning technological and strategic barriers to entry.

(a) Explain the role of economies of scale and (long run) fixed costs as technological barriers to entry. Argue that, even in the case of a natural monopoly, an incumbent monopolist may hold no market power when a market is contestable. In addition, discuss the role of sunk costs and the incumbents response lag in determining its market power (i.e.: the incumbents ability to command a profit).

Define sunk costs, fixed costs, economies of scale, natural monopoly and contestable markets as part of your answer, as well as all the technical terminology you use.

(b) Market incumbents may also rely on strategic barriers to entry. Describe the basic limit pricing model of strategic entry deterrence.

Explain why limit pricing arguments are sometimes said to rely on incredible threats. Using an entry deterrence game, explain the role of sunk actions (for instance, sunk investments) in making such incumbents threats credible.

 


Related Discussions:- Define sunk costs-fixed costs-economies of scale

interpret and explain the nmr spectrum, Treatment of Na2PdCI4 with 3-chlor...

Treatment of Na2PdCI4 with 3-chloro-2-methyl-1-propene under an atmosphere of CO yields the dimer [(11 3 - C 4 H 7 )PdClb (A). The 1H NMR spectrum of A at 298 K shows 3 signals: a

Money demand, What will happen to the shape of the money demand curve if th...

What will happen to the shape of the money demand curve if the checking accounts bear interest? will it still slope down if the interest of the checking account is fixed while the

How large is the money supply, Assume that the following data describe the ...

Assume that the following data describe the condition of the banking system: Total Reserves                         $200 billion Transactions Deposited          $700 billion

What are the capitalist countries in the world, Capitalism is the dominant,...

Capitalism is the dominant, most used form of government there is in the globe today. Presently, over 80% of countries use capitalism and a free market economy.

Trade between the two countries, Given the above trade between the two coun...

Given the above trade between the two countries, explain the trade effects on product prices, and factor incomes. Why do these effects occur?

Deceased relative at zero prices, Kennesaw University Professor Frank A. Ad...

Kennesaw University Professor Frank A. Adams III and Auburn University Professors A. H. Barnett and David L. Kaser man recently estimated the effect of legalizing the sale of cadav

Calculate private market equilibrium, Consider the following Marginal Priva...

Consider the following Marginal Private Cost (MPC), Marginal Social Cost (MSC) and market demand curves. These curves relate to a market for a product, the production of which gene

#title. phillip curve, what does phillip curve signify? how do you reconcil...

what does phillip curve signify? how do you reconcile the difference in the shap of the curve in the short run and the long run?

Estimate the length of pipe, Engineers sometimes add chlorine to pipes to d...

Engineers sometimes add chlorine to pipes to disinfect water. It is desired to achieve four logs of kill. This means that the effluent concentration of microorganisms is 10 -4 tim

Liberalisation and trends in fdi, Foreign Direct Investment and Development...

Foreign Direct Investment and Development: In neo-classical economic theory, FDI involves  the movement of capital from capital abundant  to capital scarce host countries. Mun

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd