Exam 2
Quiz yourself by thinking what should be in
each of the black spaces below before clicking
on it to display the answer.
Help!
|
|
||||
|---|---|---|---|---|---|
| Standard Industrial Classification (SIC) | show 🗑
|
||||
| Concentration Ratio | show 🗑
|
||||
| show | - (Sales top 4 firms in market/sales all firms in market) * 100
Con: Doesn't take into account changing size of top 4 firms
- Si = (Xi / T) * 100, where Xi = number of firms and T = total sales in market
🗑
|
||||
| Concentration Ratio: Herfindahl Hirschman index (HHI) | show 🗑
|
||||
| show | Implies market is less competitive
🗑
|
||||
| Problems with concentration ratios? | show 🗑
|
||||
| Perfect Competition | show 🗑
|
||||
| Monopoly | show 🗑
|
||||
| show | Many firms, different products, easy entry/exit
🗑
|
||||
| show | Few firms, same or different products, entry barriers
🗑
|
||||
| show | Two firms, (sell same product) select QUANTITY
🗑
|
||||
| Bertrand Model | show 🗑
|
||||
| Vertically Differentiated Products | show 🗑
|
||||
| show | - When only some consumers prefer it to competing products, holding price constant
- Goods are different but at the same price some consumers will buy one and some will buy other, it really depends on their preferences. Example: Pepsi y Coca Cola
🗑
|
||||
| show | True
🗑
|
||||
| Revenue Destruction Effect | show 🗑
|
||||
| Sustaining Competitive Advantage (Price - ATC) * Quantity | show 🗑
|
||||
| show | If short-run profits: Firms enter, market output increases, marker price decreases, profits go to zero (long-run equilibrium)
🗑
|
||||
| Sustaining Competitive Advantage: Monopolistic Competition | show 🗑
|
||||
| show | True
🗑
|
||||
| show | Competitive Advantage can be sustainable if there are 1) scarce resources and 2) resources are imperfectly mobile
🗑
|
||||
| Imperfectly Mobile | show 🗑
|
||||
| Co-specialized Resources | show 🗑
|
||||
| show | Economic forces limiting extent competitive advantage, can be duplicated or neutralized via resource creation activities of other firms
🗑
|
||||
| Isolating Mechanism: 1) Impediments to Imitation | show 🗑
|
||||
| show | 1) Causal Ambiguity: Firm's distinctive capabilities involve dificult to explain knowledge on how to perform capabilities
🗑
|
||||
| Impediments to Imitation: Intangible Barriers to Limitation --> Dependence on Historical Circumstances | show 🗑
|
||||
| Impediments to Imitation: Intangible Barriers to Limitation --> Social Complexity | show 🗑
|
||||
| show | A firm (move early) gets competitive advantage, raise economic power of advantage over time
🗑
|
||||
| Early Mover Advantage: Learning Curve | show 🗑
|
||||
| show | Early on build reputation for quality product, buyers less willing to switch to competitor's product. Buyer uncertainty about early mover's new product
🗑
|
||||
| show | Buyer has higher switching cost for other products (brand loyalty): 1) Firms offer coupons/discounts/offers 2) Seller may offer set of complement products fitting together along product line
🗑
|
||||
| show | Occur when buyers place higher value on good if others use it
🗑
|
||||
| show | Buyers physically linked, can communicate with each other. More users, more communication, greater value of network (with network effect, first firm advantage, new customers lean towards large network)
🗑
|
||||
| show | Buyers not physically linked. Come from use of complementary goods. More consumers in network, demand and supply of complementary goods rises, enhances value of network (with network effect, first firm advantage, new customers lean towards large network)
🗑
|
||||
| Creative Destruction | show 🗑
|
||||
| Factors Impacting Incentive of large firms or small firms to innovate: Productivity Effect | show 🗑
|
||||
| show | Firms committed to specific technology, resources committed so less valuable if switch to another technology (investment sunk in current technology). Stick to current technology. A firm not committed can evaluate different technologies before deciding
🗑
|
||||
| Factors Impacting Incentive of large firms or small firms to innovate: Replacement Effect | show 🗑
|
||||
| show | If monopolist anticipates that potential entrant has opportunity to innovate, monopolist has more incentive to innovate (monopolist loses more by firm entering than new firm gains from entering) When entry occurs output quantity goes up and price down
🗑
|
||||
| Commiment can work if: | show 🗑
|
||||
| show | Firm A selects action (more of), if firm B selects the same (more of): Bertrand Model
🗑
|
||||
| Strategic Substitutes | show 🗑
|
||||
| show | Rival firm initilly worse off
🗑
|
||||
| show | Rival firm initially better off
🗑
|
||||
| show | Impact assuming firm moving first adjust variable, rival not respond
🗑
|
||||
| show | Impact on firm moving first when rival responds, firm moving first not respond
🗑
|
||||
| show | Invest in technology, impacts production cost
🗑
|
||||
| show | Firm 1 deciding on making commitment
🗑
|
||||
| show | Firm 1 selects action regarding output or price
🗑
|
||||
| Competing Across Time: Undertake commitment? | show 🗑
|
||||
| show | Q1 rises: P falls, possible Profit1 rise (Q1 rising), likely Profit2 falls, (P falls). Firm 2 response: Q2 falls: P rises, likely Profit1 rise (P rising), possible Profit2 falls (Q2 falls)
🗑
|
||||
| show | Q1 falls: P rises, possible Profit1 fall (Q1 falling), likely Profit2 rises (P rises). Firm 2 response: Q2 rises: P fall, likely Profit1 fall (P falling), possible Profit2 rises (Q2 rise)
🗑
|
||||
| Stage 2 Scenarios: Bertrand Tough Commitment | show 🗑
|
||||
| show | P1 rises: Q1 falls, possible Profit1 falls (Q1 falls), likely Profit2 rises (Q2 rises). Firm 2 response: P2 rises: Q2 falls, likely Profit1 rises (Q1 rises), possible Profit2 falls (Q2 falls)
🗑
|
Review the information in the table. When you are ready to quiz yourself you can hide individual columns or the entire table. Then you can click on the empty cells to reveal the answer. Try to recall what will be displayed before clicking the empty cell.
To hide a column, click on the column name.
To hide the entire table, click on the "Hide All" button.
You may also shuffle the rows of the table by clicking on the "Shuffle" button.
Or sort by any of the columns using the down arrow next to any column heading.
If you know all the data on any row, you can temporarily remove it by tapping the trash can to the right of the row.
To hide a column, click on the column name.
To hide the entire table, click on the "Hide All" button.
You may also shuffle the rows of the table by clicking on the "Shuffle" button.
Or sort by any of the columns using the down arrow next to any column heading.
If you know all the data on any row, you can temporarily remove it by tapping the trash can to the right of the row.
Embed Code - If you would like this activity on your web page, copy the script below and paste it into your web page.
Normal Size Small Size show me how
Normal Size Small Size show me how
Created by:
lorenzofranciosi
Popular Economics sets