Exam 2 Study Guide: Market Power, Antitrust, and The Political Economy of Trade - Prof. St, Study notes of Introduction to Business Management

Download Exam 2 Study Guide: Market Power, Antitrust, and The Political Economy of Trade - Prof. St and more Study notes Introduction to Business Management in PDF only on Docsity! G-202: Exam 2 Study Guide 03/24/2010
Topic 5: Market Power and Antitrust

A. Firms with Market Power.
B. Strategies to Restrict Competition.  i. Market-based strategies  ii. Government-based strategies
C. Profit Maximization.  i. Concept of marginal revenue and marginal cost  ii. Optimal sales target selection  iii. Market power pricing behavior.  iv. Monopoly output and price versus efficient output and price.
D. Price Discrimination:  i. Perfect price discrimination versus imperfect price discrimination.  ii. Implications for CS, PS, and efficiency relative to the single price outcomes.
E. Basics of Game Theory  i. Players  ii. Strategies  iii. Payoffs  iv. Dominant Strategy  v. Secure Strategy  vi. Thinking Like your Rivals  vii. Nash Equilibrium
F. Normal Form Game: Simultaneous-Move One –Shot Games  i. Strategic Pricing Example.  ii. Monitoring and Mixed Strategy Example  iii. Airline Dilemma example.
G. Extensive Form Game: Multi-stage, Sequential Move Games  i. Coke and Pepsi Entry Game Example.  ii. Subgame Perfect Equilibrium.
H. Government’s role  i. Promote and monitor competition  ii. Antitrust policies and monitoring M&A activity.  iii. Interpreting the C4 and HHI measures of competition.
I. Readings:  i. REQUIRED: “The DeBeers Case”  ii. OPTIONAL: “Monopoly” and “Game Theory”


Topic 6: The Political Economy of Trade A. Supply, Demand, and Trade  i. When domestic producers have the comparative advantage (exports).  ii. When foreign producers have the comparative advantage (imports).  iii. Implications for prices, quantities, and efficiency.  iv. Who benefits and who loses from trade?  v. Explain the gains from trade.
B. Impact of Import Trade Restrictions.  i. Tariffs o a. Implications for prices o b. Implications for Qs, Qd, and imports domestically o c. Implications for efficiency.