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Quantitative Techniques for Competition and Antitrust Analysis by Peter Davis and Eliana Garcés_7

Tham khảo tài liệu 'quantitative techniques for competition and antitrust analysis by peter davis and eliana garcés_7', khoa học xã hội, kinh tế chính trị phục vụ nhu cầu học tập, nghiên cứu và làm việc hiệu quả | 5.1. Framework for Analyzing the Effect of Market Structure on Prices 233 where c is the total cost function describing the total costs of producing a given level of output Qi such that for example Cữ - dq F if qi 0 it Í 0 if tv 0. In this model beyond the first unit of production rnarginalcosts increase with production and there is a limit to the efficient productioy scale. Solving the maximization problem describes the optimal quantity that this firm will want to supptf at each announced price P c . tm Uo .v i-t-e p - tv if Piq c q ỈĨ 0 at q a I 1 1 a 0 othenvise. Next suppose there are N symmetric active firms each of which have pcoducem positive amounts so that their the firm s supply function can be summarized as q p c Ịd we may sum to give the market supply funotion nSn y c_ VMo-ket t ik If we father assume linear Mmdual demands and s idenlmal ee nsumers se that the market demand is 0MaAetd S a bp and that equilibrium price is detemiined by the intersection of supply and demand we may write Q Supply Matket s a bp x Ô Demand Market which is an equilibrium relationship that we may solve explicitly to give ihe equilibrium price Nc Sda i m Sbc Note in particular that the equditaumpricedepends on N that is the market structure and also on the cost and demand parameters including thddiza oi ge market. Note also that with symmetric single-product firms mhrket sfiuature ian be completely described by the number oetktt i.Richer modulbwthrcppire mode nuanced description. While the main aim of this se ttpnid to ouie thud our vuricps mohelkimply that price is a function of markei st uotoue it wxuld be nice to see an analytical result which fits well wig our intuition gat prices should fall when the number of competitors goes up. In fact looking at tde equattop tor ge eppiliXuipm xricetn 234 5. The Relationship between Market Structure and Price price-taking environments makes it quite difficult to see immediately that a decrease i N obviously always leads 10