Microeconomics: Market Structure
A Fable of Fruit Vendors (9/7/2009)
Fruit vendors may choose perfect competition or pricing power depending on foot traffic and other locational advantages.
Fruit vendors may choose perfect competition or pricing power depending on foot traffic and other locational advantages.
Battles of Standards (5/9/2006)
Winners in the battle among proprietary standards can keep out competitors and lock in existing customers
Winners in the battle among proprietary standards can keep out competitors and lock in existing customers
Beating the Pirates to the Punch Bowl (1/16/2006)
The low marginal cost of reproducing DVD movies has made it difficult to stamp out the bootleg DVD business in China.
The low marginal cost of reproducing DVD movies has made it difficult to stamp out the bootleg DVD business in China.
Bottom Fishing (3/7/2002)
Recession and bear stock market provide an environment for the fittest firms to expand and consolidate at the expense of weaker competitors.
Recession and bear stock market provide an environment for the fittest firms to expand and consolidate at the expense of weaker competitors.
Captive Customers (6/29/1999)
Prison inmates must pay much higher fees for using pay phones installed by exclusive phone carriers chosen by the state.
Prison inmates must pay much higher fees for using pay phones installed by exclusive phone carriers chosen by the state.
Cheap Pearls (2/16/2001)
Far from increasing consumer surplus, falling prices for luxury goods such as freshwater pearls due to overproduction reduce both consumer surplus and producer profit.
Far from increasing consumer surplus, falling prices for luxury goods such as freshwater pearls due to overproduction reduce both consumer surplus and producer profit.
Cleaning Up the Detergent Market (1/25/2012)
A cartel in detergents broke up over defections from agreed prices and promotion practices.
A cartel in detergents broke up over defections from agreed prices and promotion practices.
Competitive Strategy (7/7/2006)
Static efficiency in mature products may be good for consumers in the short run, but dynamic efficiency in innovative products is what drives the economy and elevates consumer welfare in the long run.
Static efficiency in mature products may be good for consumers in the short run, but dynamic efficiency in innovative products is what drives the economy and elevates consumer welfare in the long run.
Cost curves under increasing and diminishing returns (8/3/2007)
Under increasing returns, high fixed cost and low variable cost lead to persistently declining average total cost. The market can accommodate only one firm. Under decreasing returns, low fixed cost and rapidly rising variable cost lead to U-shaped average total cost. The market can accommodate many firms.
Under increasing returns, high fixed cost and low variable cost lead to persistently declining average total cost. The market can accommodate only one firm. Under decreasing returns, low fixed cost and rapidly rising variable cost lead to U-shaped average total cost. The market can accommodate many firms.
Disruptive Technology (9/28/1999)
Dominant companies' preoccupation with pleasing high-end customers for higher profit margin inadvertently creates niches at the low-end of the market for start-ups to invade.
Dominant companies' preoccupation with pleasing high-end customers for higher profit margin inadvertently creates niches at the low-end of the market for start-ups to invade.
From Brands to Generics - No Monopoly, No Competition (7/31/2002)
By providing incentives for brand-name drug companies to fund expensive R&D, temporary patents for expensive blockbuster drugs inadvertently lead to cheaper generic rivals when the patents expire.
By providing incentives for brand-name drug companies to fund expensive R&D, temporary patents for expensive blockbuster drugs inadvertently lead to cheaper generic rivals when the patents expire.
Market structure taxonomy (8/8/2006)
Market structure depends on the uniqueness of the products, barrier to entry, and scale economy. Specifically, the more unique the product, the higher the entry barrier, and the larger the scale economy is, the greater the pricing power.
Market structure depends on the uniqueness of the products, barrier to entry, and scale economy. Specifically, the more unique the product, the higher the entry barrier, and the larger the scale economy is, the greater the pricing power.
McDonald Toys Inc. (6/22/2006)
McDonald depends on free toys to drum up sales of mature Happy Meals.
McDonald depends on free toys to drum up sales of mature Happy Meals.
Niche Competition (9/7/2005)
Mass customization using e-commerce and digital production technology has brought uniquely different products to suit individual tastes and a new component (niche competition) to the conventional textbook market structure.
Mass customization using e-commerce and digital production technology has brought uniquely different products to suit individual tastes and a new component (niche competition) to the conventional textbook market structure.
Noodle Price-hike Conspiracy (6/22/2006)
Price hike is difficult to sustain in commodity business with many competitors.
Price hike is difficult to sustain in commodity business with many competitors.
Profit Maximization of Price Takers - youtube (11/2/2011)
As one of many small firms, price takers are powerless to set price. They set the max-profit output by equating price with marginal cost.
As one of many small firms, price takers are powerless to set price. They set the max-profit output by equating price with marginal cost.
Profit maximization under single pricing - youtube (11/2/2011)
Single-price searchers maximize profit by setting a uniform price where marginal revenue is equal to marginal cost.
Single-price searchers maximize profit by setting a uniform price where marginal revenue is equal to marginal cost.
Profit vs Efficiency Maximization - youtube (11/2/2011)
Pricing modes determine the conflicts between profit maximization and efficiency maximization.
Pricing modes determine the conflicts between profit maximization and efficiency maximization.
Riskless Insurance (2/27/2007)
Regulatory protection has led to legal price fixing in the title insurance oligopoly at the expense of home buyers.
Regulatory protection has led to legal price fixing in the title insurance oligopoly at the expense of home buyers.
Shadow Branding (6/22/2006)
Store brands gain competitive advantage by free-riding on name brands’ brand recognition and R & D.
Store brands gain competitive advantage by free-riding on name brands’ brand recognition and R & D.
Survival of the Fittest (3/7/2002)
In the PC business, low profit and generic products are compatible with market domination.
In the PC business, low profit and generic products are compatible with market domination.
The Rise of Chicken (9/7/2005)
By vertically integrating the chicken business and applying quality control and standardization to all the steps from production to marketing, Tyson Foods has brought better and cheaper chicken to consumers, higher wages to workers and fatter returns to shareholders in a once low-profit commodity business.
By vertically integrating the chicken business and applying quality control and standardization to all the steps from production to marketing, Tyson Foods has brought better and cheaper chicken to consumers, higher wages to workers and fatter returns to shareholders in a once low-profit commodity business.
The Rise of Dogs (9/11/2007)
Rising affluence and other social factors have led to the emergence of the dog care industry.
Rising affluence and other social factors have led to the emergence of the dog care industry.
The Snowball Effect (11/9/2001)
Knowledge-based industries subject to increasing returns because of high R&D fixed costs and low variable costs naturally tend to monopolize the market.
Knowledge-based industries subject to increasing returns because of high R&D fixed costs and low variable costs naturally tend to monopolize the market.
The Trustbusters' New Tools (8/31/1999)
Econometric analysis of store checkout scanners' data can directly predict whether a proposed merger will raise prices.
Econometric analysis of store checkout scanners' data can directly predict whether a proposed merger will raise prices.
Too Much Vitamin C? (6/22/2006)
Legacy habit of central planning has led to antitrust charges against Chinese vitamin C oligopoly.
Legacy habit of central planning has led to antitrust charges against Chinese vitamin C oligopoly.
