《管理经济学与商业策略 Managerial Economics & Business Strategy》教学资源（PPT课件讲稿，英文版）Chapter 13 A Manager’s Guide to Government in the Marketplace

Managerial economics Business strategy Chapter 13 A Manager’ s Guide to Government in the Marketplace Michael R Baye, Managerial Economics and Business Strategy, 3e. CThe McGraw-Hill Companies, Inc, 1999

Michael R. Baye, Managerial Economics and Business Strategy, 3e. ©The McGraw-Hill Companies, Inc. , 1999 Managerial Economics & Business Strategy Chapter 13 A Manager’s Guide to Government in the Marketplace

Overview I. Market failure a Market power Externalities Public goods a Incomplete Information Rent seeking III. Government Policy and International Markets a Quotas Tariffs ■ Regulations Michael R Baye, Managerial Economics and Business Strategy, 3e. CThe McGraw-Hill Companies, Inc, 1999

Michael R. Baye, Managerial Economics and Business Strategy, 3e. ©The McGraw-Hill Companies, Inc. , 1999 Overview I. Market Failure  Market Power  Externalities  Public Goods  Incomplete Information II. Rent Seeking III. Government Policy and International Markets  Quotas  Tariffs  Regulations

Market power Firms with market power produce sociall Dead weight inefficient output levels MC ■ Too little output Price exceeds mc ■ Deadweight loss Dollar value of society's welfare loss Q MR Michael R Baye, Managerial Economics and Business Strategy, 3e. CThe McGraw-Hill Companies, Inc, 1999

Michael R. Baye, Managerial Economics and Business Strategy, 3e. ©The McGraw-Hill Companies, Inc. , 1999 Market Power • Firms with market power produce socially inefficient output levels.  Too little output  Price exceeds MC  Deadweight loss • Dollar value of society’s welfare loss MR PM QM Deadweight Loss MC D Q P

Antitrust policies Administered by the doj and ftc Market Concentration Herfindahl-Hirshman Index: HHI=10.0002 w2 Industries in which the HHI exceed 1800 are generally deemed highly concentrated The doj or FTC may, in this case, attempt to block a merger if it would increase the hhi by more than 100 Michael R Baye, Managerial Economics and Business Strategy, 3e. CThe McGraw-Hill Companies, Inc, 1999

Michael R. Baye, Managerial Economics and Business Strategy, 3e. ©The McGraw-Hill Companies, Inc. , 1999 Antitrust Policies • Administered by the DOJ and FTC • Market Concentration  Herfindahl-Hirshman Index: HHI = 10,000 S wi 2  Industries in which the HHI exceed 1800 are generally deemed “highly concentrated”.  The DOJ or FTC may, in this case, attempt to block a merger if it would increase the HHI by more than 100

Sherman act (1890) Sections 1 and 2 prohibits price-fixing market sharing and other collusive practices designed to monopolize, or attempt to monopolize? a market Michael R Baye, Managerial Economics and Business Strategy, 3e. CThe McGraw-Hill Companies, Inc, 1999

Michael R. Baye, Managerial Economics and Business Strategy, 3e. ©The McGraw-Hill Companies, Inc. , 1999 Sherman Act (1890) • Sections 1 and 2 prohibits price-fixing, market sharing and other collusive practices designed to “monopolize, or attempt to monopolize” a market

Clayton Act(1914) and tying arrangements where the Fo Section 3 Prohibits exclusive deali effect may be to substantially lessen competition Michael R Baye, Managerial Economics and Business Strategy, 3e. CThe McGraw-Hill Companies, Inc, 1999

Michael R. Baye, Managerial Economics and Business Strategy, 3e. ©The McGraw-Hill Companies, Inc. , 1999 Clayton Act (1914) • Section 3 Prohibits exclusive dealing and tying arrangements where the effect may be to “substantially lessen competition

Externalities A cost borne by people who neither produce nor consume the good Example: Pollution a Caused by the absence of well-defined property rights Government regulations may induce the socially efficient level of output by forcing firms to internalize pollution costs The Clean air Act of 1970 Michael R Baye, Managerial Economics and Business Strategy, 3e. CThe McGraw-Hill Companies, Inc, 1999

Michael R. Baye, Managerial Economics and Business Strategy, 3e. ©The McGraw-Hill Companies, Inc. , 1999 Externalities • A cost borne by people who neither produce nor consume the good. • Example: Pollution  Caused by the absence of well-defined property rights. • Government regulations may induce the socially efficient level of output by forcing firms to internalize pollution costs  The Clean Air Act of 1970

Public goods a good that is nonrival and nonexclusionary in consumption a Nonrival: A good which when consumed by one person does not preclude other people from also consuming the good Example: Radio signals, national defense Nonexclusionary: No one is excluded from consuming the good once it is provided Example: Clean air Free rider> problem a Individuals have little incentive to buy a public good because of their nonrival nonexclusionary nature Michael R Baye, Managerial Economics and Business Strategy, 3e. CThe McGraw-Hill Companies, Inc, 1999

Michael R. Baye, Managerial Economics and Business Strategy, 3e. ©The McGraw-Hill Companies, Inc. , 1999 Public Goods • A good that is nonrival and nonexclusionary in consumption.  Nonrival: A good which when consumed by one person does not preclude other people from also consuming the good. • Example: Radio signals, national defense  Nonexclusionary: No one is excluded from consuming the good once it is provided. • Example: Clean air • “Free Rider” Problem  Individuals have little incentive to buy a public good because of their nonrival & nonexclusionary nature

Public goods Total demand for streetlights MC of streetlights Individual Consumer Surplus 18 Individual demand for streetlights 12 Streetlights Michael R Baye, Managerial Economics and Business Strategy, 3e. CThe McGraw-Hill Companies, Inc, 1999

Michael R. Baye, Managerial Economics and Business Strategy, 3e. ©The McGraw-Hill Companies, Inc. , 1999 Public Goods Streetlights $ Total demand for streetlights Individual Consumer Surplus 90 54 30 18 0 12 30 MC of streetlights Individual demand for streetlights

Incomplete Information Government serves as a provider of nformation to combat the inefficiencies caused by incomplete and/or asymmetric information Michael R Baye, Managerial Economics and Business Strategy, 3e. CThe McGraw-Hill Companies, Inc, 1999

Michael R. Baye, Managerial Economics and Business Strategy, 3e. ©The McGraw-Hill Companies, Inc. , 1999 Incomplete Information • Government serves as a provider of information to combat the inefficiencies caused by incomplete and/or asymmetric information