Micro 4/17

Monopoly

  • one seller
  • many buyers
  • barriers to entry (source of monopoly power)
  • no close substitutes (electricity) (other source of monopoly power)
  • firms are price setters (price searchers)

Price Discrimination

  • Three Requirements:
  • monopoly power
  • segment the market (hair cuts for women)
  • no arbitrage (buying something and selling at a higher price)
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