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| A market or industry in which individual firms have some control over the prices of their input |
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| Economies/diseconomies of scale |
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| General Equilibrium vs. partial equilibrium |
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| Charcteristics of monopolys |
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| No close substitutes, and many barriers to entry |
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| In the long run, average profits=0 |
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| In the long run, average profits=0 (free entry) |
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| Few big firms with market power (can control price) |
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| a solution concept of a game involving two or more players, in which no player has anything to gain by changing only his or her own strategy unilaterally |
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| The maximin strategy is a "rational" solution to all two-person zero come games |
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| Negative externality means |
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| Ways to correct for externalities: |
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Regulation
Taxes (=MDC)
Coase theorem (set property rights and negotiate)
Auction pollution permits. (Determine “optimal” level of pollution. |
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| Nonrival and nonexcludable. |
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| if you don’t know if a product is good or bad, you are not willing ot pay a high price – this pushes good products out of the market. |
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| when one party in a contract passes the risk or cost involved with their behavior on to the other party (insurance). |
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