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CHAPTER 9:
MONOPOLY
COREECONOMICS, 3RD EDITION BY ERIC CHIANG
Slides by Debbie Evercloud
© 2013 Worth Publishers
CoreEconomics ▪ Chiang/Stone
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CHAPTER OUTLINE
• Monopoly Markets
• Comparing Monopoly and Competition
• Regulation and Antitrust
© 2013 Worth Publishers
CoreEconomics ▪ Chiang/Stone
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LEARNING OBJECTIVES
• At the end of this chapter, the student will be able to:
– Describe characteristics of monopoly and monopoly power
– Describe how firms use barriers to entry to maintain monopoly power
– Use monopoly market analysis to determine equilibrium price and quantity
– Describe the difference between monopoly and competition
© 2013 Worth Publishers
CoreEconomics ▪ Chiang/Stone
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LEARNING OBJECTIVES
• At the end of this chapter, the student will be able to:
– Describe the different forms of price discrimination – Describe the different approaches to regulating a natural monopoly
– Relate the history and purpose of antitrust legislation to monopoly analysis
© 2013 Worth Publishers
CoreEconomics ▪ Chiang/Stone
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LEARNING OBJECTIVES
• At the end of this chapter, the student will be able to:
– Relate the history and purpose of antitrust legislation to monopoly analysis
– Apply concentration ratios and the HerfindahlHirschman index to analyze the likelihood of regulation in a given market
– Describe the conditions of a contestable market and its significance
© 2013 Worth Publishers
CoreEconomics ▪ Chiang/Stone
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GOOGLE AS AN EXAMPLE OF
MONOPOLY POWER
• Google is an example of a firm with monopoly power.
– This means it has the ability to control price.
• Google is not a pure monopoly because it has some competitors.
– Yet it is so dominant in the market that it’s behavior is very different from the behavior of firms under perfect competition.
© 2013 Worth Publishers
CoreEconomics ▪ Chiang/Stone
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BY THE NUMBERS: MONOPOLY
POWER
• Example of a monopoly: © 2013