ModelofInternationalTrade文件材料.ppt

Cartels in reality Some economists say cartels always fail because of cheating - not true!! Vitamins Cartel: see Perloff website -lasted 9 years. Prices market shares fixed worldwide Average prosecuted international cartel had lasted 6 years 8.8% of LDC imports affected by 16 top cartelised products global cartels now: steel tubes, vitamins, soya, lysine,aluminium, citric acid. NB Ferries? historical: light bulbs, chemicals, steel Competition Versus Cartel Cournot model with 2 firms Start with industry demand curve then for each firm draw MR=MC graph for each possible output level of other firm derive reaction curve from all of these draw both reaction curves identify equilibrium when each firm compatible with other policy or strategy may shift MC/reaction curve so one firm produces more for given output of other each point on the reaction curve is a pair of MC/MR diagrams American Airlines’ Profit-Maximizing Output American Airlines’ Profit-Maximizing Output Figure 2b American Airlines’ Profit-Maximizing Output Figure 3 American and United’s Best-Response Curves Cournot model and MR=MC more than 2 firms Perloff p.446-448 and Appx 13A show how number of firms affects behaviour Cournot firms in effect set prices so MR=MC= p(1+1/?f) where ?f is elasticity residual demand for firm It turns out that ?f equals n? where ? is demand elasticity for the industry and n is number of firms. More firms more elastic demand As demand curve shifts left, it gets more elastic at given price even if slope same Figure 4 Duopoly Equilibria Figure 4a Duopoly Equilibria Figure 13.4b Duopoly Equilibria Table 3 Cournot Equilibrium Varies with the Number of Firms Figure 5 Stackelberg Game Tree Figure 6 Stackelberg Equilibrium Strategic Trade Policy Krugman popularised idea in 1980s that you could secure monopoly profits for a country’s industry by credibly committing to subsidies that would keep up output even if others entered the market but later said we ha