Summary
Summary Class 15 Markets-Firms-A class notes and Presentation
- Course
- ECO204
- Institution
- University Of Toronto (U Of T )
Class 15 Markets-Firms-A class notes and Presentation
[Show more]
Seller
Follow
Content preview
ECO204Analysis of Firms by Market Structure
Part 1: “Theoretical and Practical Measu
of Market Structure”
Ajaz Hussain, Economics, University of Toronto (STG)
,Some Biz-Decisions of a “Firm” (loosely speaking)
In 204, we study this
Organizational
module for firms in various Structure&
“market structures” Decision-
Making
Architecture
Prices & “Competitive
Output Strategy”
(Loosely speaking)
Partial list of a Production
Executive firm’s biz-decisions Process and
Technology:
Compensation
Inputs à
Output(s)
Marketing,
Capital Branding,
Structure Advertising,
Segmentation
,Market Structure: Theory
In theory, Market Structure “Characterized” By Number of Firms and/or Whether or Not Firms are Pr
Monopoly Oligopoly “Perfect” Compe
Finite 𝑁 > 1 Price Tak
Finite 𝑁 > 1 Partial Price Making
𝑁 = 1 Price Making Firm (Note: some texts/cour
Firms
that Perfect Competit
∞ (Cournot) Oligopo
Example: Number of Firms and Market Power?
“The market for crude oil is global, and Texas as a whole (let alone a single
constitutes only 1.3 percent of world oil production; thus, the exercise of mark
by Texas oil producers is implausible (Texas and world production data are for
were accessed from the US Energy Information Administration [from here] , res
on September 27, 2015)”
Source: Soren T. Anderson, Ryan Kellogg, and Stephen W. Salant, "Hotelling
Pressure," Journal of Political Economy 126, no. 3 (June 2018): 984-102
, Market Structure: Practical Measures 1
In practice, two metrics of Market Structure: Concentration Ratio 𝑪𝑹𝑵 and Herfindahl-Hirschmann In
“Tricky”. Lucr
Define the “Market” Boundary and let 𝑇 = Total # of firms in the market for Corporate Fi
"#$% # $'(')*'+
Calculate each firm’s % share of market revenues (𝑠! = ,-$.'/ $'(')*'
100)
Concentration Ratio = 𝐶𝑅0 Herfindahl-Hirschmann Index = 𝑯𝑯
Sort 𝒔𝒊 in descending order. Pick integer 𝒏 and compute: Compute:
𝒏 𝑻
𝑪𝑹𝒏 = - 𝒔𝒊 𝑯𝑯𝑰 = - 𝒔𝟐𝒊
𝒊3𝟏 𝒊3𝟏
Range of 𝐶𝑅" and 𝐻𝐻𝐼?
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller KM52. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for CA$12.92. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
73216 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now