Part 2 book “Microeconomics” has contents: Pricing with market power, monopolistic competition and oligopoly, game theory and competitive strategy, markets for factor inputs, investment, time, and capital markets, general equilibrium and economic efficiency, markets with asymmetric information, and other contents. | Part three Market Structure and Competitive Strategy Part 3 examines a broad range of markets and explains how the pricing, investment, and output decisions of firms depend on market structure and the behavior of competitors. Chapters 10 and 11 examine market power: the ability to affect price, either by a seller or a buyer. We will see how market power arises, how it differs across firms, how it affects the welfare of consumers and producers, and how it can be limited by government. We will also see how firms can design pricing and advertising strategies to take maximum advantage of their market power. Chapters 12 and 13 deal with markets in which the number of firms is limited. We will examine a variety of such markets, ranging from monopolistic competition, in which many firms sell differentiated products, to a cartel, in which a group of firms coordinates decisions and acts as a monopolist. We are particularly concerned with markets in which there are only a few firms. In these cases, each firm must design its pricing, output, and investment strategies, while keeping in mind how competitors are likely to react. We will develop and apply principles from game theory to analyze such strategies. Chapter 14 shows how markets for factor inputs, such as labor and raw materials, operate. We will examine the firm’s input decisions and show how those decisions depend on the structure of the input market. Chapter 15 then focuses on capital investment decisions. We will see how a firm can value the future profits that it expects an investment to yield and then compare this value with the cost of the investment to determine whether the investment is worthwhile. We will also apply this idea to the decisions of individuals to purchase a car or household appliance, or to invest in education. ChaPterS 10 11 12 13 14 15 Market Power: Monopoly and Monopsony 369 Pricing with Market Power 413 Monopolistic Competition and Oligopoly 465 Game theory and .
