Regulations on Monopoly and Monopolistic Competition

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Regulations on Monopoly and Monopolistic Competition

This lecture dove into greater depth about how to regulate monopoly and also introduced monopolistic competition.

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University of Oklahoma
Econ 1123 - Princ. of Econ-Micro

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ECON 1123 1st Edition Lecture 20 Outline From Previous Lecture (Lecture 19) I. Price Discrimination II. Regulating the Natural Monopolist III. How do you tell monopoly power? Outline Lecture 20 I. Antitrust Policy II. Measuring the Extent of monopoly power III. Contestable Markets IV. Monopolistic Competition Lecture 20 Notes I. Antitrust Policy Antitrust Policy- laws designed with intention to maintain competition and prevent monopolies from developing Examples: Sherman Anti-Trust Act (1890)- conspiracies in the restraint of trade and attempt to monopolize are illegal Clayton Act (1914)- Makes price discrimination illegal IF it lessens competition Federal Trade Commission Act (1914)- Unfair or deceptive commercial practices are illegal II. Measuring the Extent of monopoly power Stigler: “All products or enterprises with large long run elasticities of demand should be combined in a single market” Cross elasticity of demand= (% change in Qdemanded of X)/(% change in Price Y) You look at the relationship between these and if they are both increasing then they are substitues Herfendal-Hirschman Index- Way of measuring industrial concentration, equal to the sum of the squares of market shares of all firms in the industry. HHI= (S1)^2 + (S2)^2+….(SN)^2 These notes represent a detailed interpretation of the professor’s lecture. GradeBuddy is best used as a supplement to your own notes, not as a substitute.

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