Does the competitive fringe control the dominant firm, or does the dominant firm control the fringe?
Does the competitive fringe control the dominant firm, or does the dominant firm control the fringe?
Homework Answers
The competitive fringe can control the dominant firm, and the dominant firm can control the fringe. The dominant firm selects the output and influence the price in market, that in turn impacts the amount of output produced by fringe firms as they accept price as given, thus acts as a price-taker. Moreover the dominant firm control could cause an economy of scale, thus it becomes cheaper to produce products for dominant firm than for fringe. The dominant firms may fix the prices very low for cutting out fringe firms. The competitive fringes at the same time can provide products/services that may surpass those products/services that offer the dominant firms at higher prices
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Does the competitive fringe control the dominant firm, or does
the dominant firm control the fringe?
2. Consider a dominant firm in a market with a competitive fringe. The market demand curve...
2. Consider a dominant firm in a market with a competitive fringe. The market demand curve is given by P = 100 − Q.The supply curve of the competitive fringe is perfectly elastic and given by P=Pf. The dominant firm has a marginal cost c where Pf > c (a) For what value of Pf is the presence of the competitive fringe binding on the dominant firm? (b) Suppose the dominant firm has c = 0 and the competitive fringe...
1. Dominant firm with competitive fringe Consider a monopolist with costs MCs 2+0.1qa and ATC-2+0.059a facing...
1. Dominant firm with competitive fringe Consider a monopolist with costs MCs 2+0.1qa and ATC-2+0.059a facing a market demand is P-28-0.1Q. At the price set by the dominant firm, what will be the output supplied by the fringe firms, combined and individually? Calculate. e. Calculate profits earned by the dominant and fringe firms. Comment on what you observe. Who earns more? How does the presence of competitive fringe affect the profit of the leading firm? f. Suppose that the dominant...
12. Consider an industry with a dominant firm and a competitive fringe. The market demand for...
12. Consider an industry with a dominant firm and a competitive fringe. The market demand for the product is given by P - 100 - 20 where P is the market price for the product, and Q is the total amount sold in the industry. The dominate firm's marginal cost is given by the equation MC-80, and the supply curve for the competitive fringe is Q-P/2. Use this information to find the Residual Demand curve faced by the dominant firm;...
What is the relationship between the Stackelberg model and the dominant-firm-competitive-fringe model?
What is the relationship between the Stackelberg model and the dominant-firm-competitive-fringe model?
The market demand curve is given by Q = 200-2p. There is one dominant firm, which sets the market...
The market demand curve is given by Q = 200-2p. There is one dominant firm, which sets the market price and has a constant marginal cost of 5, and a competitive fringe of 10 price-taking firms, each of which has a marginal cost function MC (Q) = 10 +Q. Derive the equation of the dominant firm’s residual demand curve. What price will the dominant firm set to maximize its profits? At this price, how much does the competitive fringe produce?
Suppose that John Jones, Inc. is the dominant firm in the industry. Graphically depict how price,...
Suppose that John Jones, Inc. is the dominant firm in the industry. Graphically depict how price, quantity, profits and welfare would change if John Jones, Inc. merged with a firm in the competitive fringe and there were no efficiency gains.
3. Unlike a perfectly competitive firm, the monopolistic competitive firm is able to (a little) control...
3. Unlike a perfectly competitive firm, the monopolistic competitive firm is able to (a little) control price. Discuss, why, the position of the firm in the long run, is similar to that of a perfectly competitive one. 4. List the characteristics of a monopolistically competitive market structure. 5. Describe the firm's decision in choosing the profit maximizing or loss minimizing level of output. Illustrate.
PROBLEM I. Suppose that, in a market of a certain product, there is a single dominant...
PROBLEM I. Suppose that, in a market of a certain product, there is a single dominant firm with a cost function C(Q)cQ, where c 0 is a constant, and the competitive fringe with a supply function Q(p)p-120. The market demand function is given by QM(P)-600-3p. Q4. Under what condition of c does the competitive fringe produce nothing at the equilibrium? (a) c 240. (b) c 90. (c) c 2 100. (d) 100 cS 40 (e) с 60.
PROBLEM I. Suppose that, in a market of a certain product, there is a single dominant...
PROBLEM I. Suppose that, in a market of a certain product, there is a single dominant firm with a cost function C(QcQ, where c > 0 is a constant, and the competitive fringe with a supply function Qf(p) = p-120 The market demand function is given by QM(p) = 600-3p. Q1. When c= 100, the dominant firm's profit-Inaximizing quantity is (a) 100 (b) 144 (c) 180 (d) 160 (e) 120 Q2. When c- 100, the equilibrium market price of the...
PROBLEM I. Suppose that, in a market of a certain product, there is a single dominant...
PROBLEM I. Suppose that, in a market of a certain product, there is a single dominant firm with a cost function C(QcQ, where c > 0 is a constant, and the competitive fringe with a supply function Qf(p) = p-120 The market demand function is given by QM(p) = 600-3p. Q1. When c= 100, the dominant firm's profit-Inaximizing quantity is (a) 100 (b) 144 (c) 180 (d) 160 (e) 120 Q2. When c- 100, the equilibrium market price of the...
1. Dominant firm with competitive fringe Consider a monopolist with costs MCs 2+0.1qa and ATC-2+0.059a facing a market demand is P-28-0.1Q. At the price set by the dominant firm, what will be the output supplied by the fringe firms, combined and individually? Calculate. e. Calculate profits earned by the dominant and fringe firms. Comment on what you observe. Who earns more? How does the presence of competitive fringe affect the profit of the leading firm? f. Suppose that the dominant...
12. Consider an industry with a dominant firm and a competitive fringe. The market demand for the product is given by P - 100 - 20 where P is the market price for the product, and Q is the total amount sold in the industry. The dominate firm's marginal cost is given by the equation MC-80, and the supply curve for the competitive fringe is Q-P/2. Use this information to find the Residual Demand curve faced by the dominant firm;...
Suppose that John Jones, Inc. is the dominant firm in the industry. Graphically depict how price, quantity, profits and welfare would change if John Jones, Inc. merged with a firm in the competitive fringe and there were no efficiency gains.
3. Unlike a perfectly competitive firm, the monopolistic competitive firm is able to (a little) control price. Discuss, why, the position of the firm in the long run, is similar to that of a perfectly competitive one. 4. List the characteristics of a monopolistically competitive market structure. 5. Describe the firm's decision in choosing the profit maximizing or loss minimizing level of output. Illustrate.
PROBLEM I. Suppose that, in a market of a certain product, there is a single dominant firm with a cost function C(Q)cQ, where c 0 is a constant, and the competitive fringe with a supply function Q(p)p-120. The market demand function is given by QM(P)-600-3p. Q4. Under what condition of c does the competitive fringe produce nothing at the equilibrium? (a) c 240. (b) c 90. (c) c 2 100. (d) 100 cS 40 (e) с 60.
PROBLEM I. Suppose that, in a market of a certain product, there is a single dominant firm with a cost function C(QcQ, where c > 0 is a constant, and the competitive fringe with a supply function Qf(p) = p-120 The market demand function is given by QM(p) = 600-3p. Q1. When c= 100, the dominant firm's profit-Inaximizing quantity is (a) 100 (b) 144 (c) 180 (d) 160 (e) 120 Q2. When c- 100, the equilibrium market price of the...
PROBLEM I. Suppose that, in a market of a certain product, there is a single dominant firm with a cost function C(QcQ, where c > 0 is a constant, and the competitive fringe with a supply function Qf(p) = p-120 The market demand function is given by QM(p) = 600-3p. Q1. When c= 100, the dominant firm's profit-Inaximizing quantity is (a) 100 (b) 144 (c) 180 (d) 160 (e) 120 Q2. When c- 100, the equilibrium market price of the...
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