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Effects of Market Power

Effects of Market Power. Antitrust Law Prof. Mark R. Patterson Fordham University School of Law. $. economies of scale. diseconomies of scale. (Marginal) Cost. Cost. $15. range in which sellers operate. 100. 1000. Quantity. $. buyers who value the good more than p high.

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Effects of Market Power

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  1. Effects of Market Power Antitrust Law Prof. Mark R. Patterson Fordham University School of Law

  2. $ economies of scale diseconomies of scale (Marginal) Cost Cost $15 range in which sellers operate 100 1000 Quantity

  3. $ buyers who value the good more than phigh P=phigh buyers who value the good between MC and plow P=plow MC P=MC Demand few not quite so many many Quantity

  4. $ ph profit at ph pm profit at pm profit/item pl profit at pl MC D qph qpm qpl Quantity

  5. $ benefit to consumers (consumer surplus) at ph: at pl: ph at pc: pl MC pc D qph qpl qc Quantity

  6. consumer surplus producer surplus Price ($) pm deadweight loss (loss to society) MC pc D sales not made qm qc Quantity

  7. Profit/ Unit 10 8 6 4 2 0 -2 Total Profit 1000 1600 1800 1600 1000 0 -1400 Total Profit 0 800 1200 1200 800 0 -1200 Price 30 28 26 24 22 20 18 Quantity 100 200 300 400 500 600 700 Quantity 0 100 200 300 400 500 600 Price ($) 32 Dfirm(1) , Dfirms(3) p1 = 26 Dfirms(2) p4 =25 Dfirm(4) MC p2 = 20 20 Dmarket 0 250 300 500 600 Quantity

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