Rhymes said:
Plain wrong. An unragulated monopoly has power over profit margin and price setting. And there are no small businesses in a monopoly, unless you are rather talking about a monopolistic competitive market (Yom probably knows the accurate english term for that one
) The market system that provides the cheepest goods for the consumers is an olygopoly: many equally large corporation.
superisis said:
that's the term, monopolistic competition (i.e. the bar senario)
Actually, it's monopolistically competitive, but there's no difference between the two other than grammar.
@Rhymes: You probably just made a typo, but just in case, it's spelled "oligopoly" in English.
Either way, as superisis said, oligopolies are often not the best markets. Theoretically, perfect competition results in prices equal to the average total cost of a product, meaning that firms earn zero economic profit in the long run (though they do have accounting profit; economic profit takes into account opportunity costs). Price cannot be lower than the average total cost of a product, as firms would just leave the market in such a situation. In the real world, monopolistically competitive markets are the best, as they are closest to the equilibrium quantity produced and equilibrium price that is attained in a perfectly competitive market. Oligopolies are better than monopolies, but, in general, they produce less than the efficient (equilibrium) quantity and sell it at a price higher than the efficient (equilibrium) price. Basically, going back to the picture I posted, the more efficient the market, the farther down it goes down the demand line to the point where marginal cost (the supply curve) and the demand curve intersect.
Rhymes said:
Again you have the wrong term, a market in which there are few big business's and a lot of small ones is not a monopoly. But anyway, in many markets in which there is a large corporation, small businessmen cannot just "work hard" and "be smart" to merge. There are often merging obstacle that can be financial or technological. Again there is an official term for that but I only know the french one
Say the term in French. Maybe I can translate it (though I doubt it, it's probably French-specific). I can't recall a specific term for a prevention of mergers.
superisis said:
I'm not Yom, but I can clear some things up.
Few people are.
Either way, you seem to know much more than me on the theory of macroeconomics (or at least its history). We'll see if that statement holds true at the end of the semester.
superisis said:
I believe you are referring to barriers to entry.
That's what I thought of, too, but he's talking about barriers to merging, not barriers to entering the market that the monopoly dominates.
blindside said:
@yom - I guess all that studying of microecon finally pays off!
It paid off instantly since it's so intriguing. These types of discussions are always interesting, fun, and even useful as they allow me to augment my understanding and solidify what I've learned through application.
BasketCase said:
Okay. Stratego, please stop. You're really creeping me the hell out with this sudden neo-conservatism you've developed.....
Relax! He's joking. Never take anything stratego posts at face value.
) you'll probably outmatch me... I've taken two years of higher level economics in the IB program... which basically mean that I took one semester of learning things (first semester of Junior year) and three semester of repetition = no studying what so ever. All I got to show for it was a lousy 6.
