Czarny, Mariusz Poland Unknown Project Manager Building Consultancy @ Czerwińska Nojszewska, Patrycja Poland Warsaw. Monopoly – exercises 1 Exercise (E. Czarny, E. Nojszewska, Mikroekonomia – zbiór zada ń) The monopolist’s inverse demand function is given by: P (q). Exercise (E. Czarny, E. Nojszewska, Mikroekonomia – zbiór zada ń) The price elasticity of demand for the good produced by a monopoly is equal to –3.
|Published (Last):||28 February 2009|
|PDF File Size:||10.26 Mb|
|ePub File Size:||4.47 Mb|
|Price:||Free* [*Free Regsitration Required]|
Mentioned czaarny should be however the administrative weaknesses formulated by J. Fines imposed for the use of monopolistic practices fail to perform that function in Poland while their importance is growing in terms of fostering the awareness of entrepreneurs nojszewsak the obligation to observe competition law.
In the latter case, competition law shall not be applicable because, even though its market effects may seem similar to those of an overt collusion, entrepreneurs have neither met nor agreed upon their actions Easterbrock, Antitrust Cases…, p.
It is doubtful whether a convergence of market actions of competitors may at all be defined as collusion, even a tacit one.
First, price-fixing is effective when: Instead, they often constitute a form of market research directed at shaping the individual actions of participating companies, which may be interdependent from the plans czarjy their competitors.
Williamson, Markets and Hierarchies. A company or a consumer who nojszzewska losses, due to monopolistic practices of a dominant undertaking or a cartel, may relay on private enforcement to alleviate them. Of direct relevance to cartel proceedings is the fact that the Act of treats the carny to restrict or eliminate competition in a relevant market purpose of an agreement as an action infringing competition law, irrespective of its implementation effect of an agreement.
For example, Herbert Hovenkamp states that the application of competition law is necessary if administrative intervention into market processes is economically justified9. They are considered to be negative because the achievement of such business goals may nojszeweka competition and go against social interests7.
The economics of competition law clearly differentiates between interdependence of market behaviour in an oligopolistic market and agreements czxrny competitors that restrict competition by fixing prices, production quotas, market. Competition law is aimed against strategic barriers built by incumbents in their relevant markets. Interdependence generating market followers is reached through market research and strategic planning, or even by playing a sophisticated business game in order to mislead other czarnt players.
The European cement cartel, which operated for ten years with the support nokszewska the European Association of Cement Producers Cembureaueight national associations and 33 cement manufacturers, constitutes a good example of a precise organisation and stability of a cartel. It was analysed by the UOKiK in its explanatory proceedings concerning fuel prices at local gas stations28 discontinued in the end, when the uniformization retail prices was found to be the result of parallel actions of gas station owners or price following.
The absolute prohibition of cartels results from the fact that they lead to the monopolisation of the economy that restricts or even eliminates competition with all the negative consequences thereof.
Economic Approach to Counteracting Cartels
Polish experiences show also that the competition authority should treat leniency notices with extreme prudence because it is possible that the applicant is more intent on harming its competitors than on benefiting from a penalty reduction. It creates transparency of the market and competitors may know their prices without price collusion.
This justifies the implementation of particularly severe restrictions against agreements between competitors aimed at price fixing, setting production and sales quotas, sharing czzarny, setting other terms of trade or the exchange of sensitive information Production quota fixing is a substitute for price-fixing, if the prices result from an attempt to maximize the profit of the seller and price negotiations with buyers, then production quotas must result from a cost-price analysis.
Competition law finds justification in microeconomic theory, and not nojszewdka in the concept of social deadweight loss4, but also in the concept explaining the essence, reasons and ways to minimize market failures5. Theory and Practice, Cambridgep.
An agreement between competitors operating in a particular market may effectively close that market for potential competition, enabling parties to that agreement to apply monopolistic practices and achieve nomszewska thereof.
A digressive penalty scheme encourages cartel members to file leniency notices.
The realisation that the economics of competition law recognises the interdependence theory as an objective mechanism of oligopolistic markets does not change the fact that concentrated market structures facilitate the 23 Czary. The economic concept of market failures justifies the implementation of competition law in order to limit or eliminate negative external effects of business activities.
Competition law should be applied only in cases when the competition authority can prove the existence of an overt collusion but not in cases of tacit ones. In their opinion, the market is able to self-adjust its deviations to the normal status of competitive equilibrium.
Why are these agreements subject to the highest fines and, in some countries USA, Canada, Mexico, UKsubject to both fines as well as imprisonment?
The interdependence theories of oligopolistic markets were developed further by the game theory. Particularly important is the examination of price change predictions and an analysis whether actual prices result from the actions of competitors or from adjustment to the conduct of the price leader.
This of course does not discredit the leniency procedure as such effectively applied in the USA sincebut it is worth pointing out the risk of its misuse. Paul, MNp. Conduct of competitors in nojszweska oligopoly is explained by the interdependence theory formulated by Augustin Cournot.
Which methods make it possible to differentiate cartels from competition in oligopolistic markets including economic and econometric analyses? Thus, depending on the physical and chemical properties of the goods, the producer may be nojszewsja its nojszswska in a particular territory not as a result of an agreement between competitors, but due to the optimization of trade logistics. It is likely that the weak discipline of Polish cartels results from a general lack of social capital the inability to co-operate among Poles in various areas including, most probably, also cartel agreements.
The price game played by oligopolists forces competitors to nojdzewska costs and may eliminate weakest players thus increasing market concentration as well as transparency of the relevant market.
Market transparency and cartels V.
Calaméo – Economic Approach to Counteracting Cartels
Varian, Mikroekonomia, Warszawap. Which methods make it possible to differentiate cartels from competition in oligopolistic markets including economic and econometric analyses?
His model was further developed by Heinrich von Stackelberg who presumed that one of the members of the duopoly knew that its competitor was following the principles of the Cournot model.