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Cards In This Set
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Which concept of competition referring to when he says the general view seems still to regard the concept of competition currently employed by economists as the significant one and that of the businessman as an abuse? Why does the competition of a business man appear as an abuse in this framework?
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PC, everything is considered an abuse because in the model the only thing you change is Q. anything the business man does is an abuse because if he changes anything its not in the model and is assumed to be monopoly power, i.e. pricing policy, warranty, etc.
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Why would PC results deprive of their score all activities which the verb to compete describes?
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Terms of trade takers, take market price as given. everything is homogenous and standardized. when you use PC as a standard everything is optimal so no room to rival because everything is already the best.
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Why doesn't H object to using the tautological method for analyzing individual plans? In contrast, why does he object to that method for analyzing what happens when multiple people must coordinate their behavior?
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When you're doing your own budget constraint and indifference curves its okay because you can know all the information at one time, for you. but, when you try and coordinate information with other people its difficult because no one has the same information at the same time.
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Can PC model ever be out of eq? why or why not? in eq, is there any process of C taking place? can we derive a process of C from PC assumptions that would generate PC results?
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Cant be out of eq because if thats the case, you cant buy and sell all that you want. if you're in PC there's no process and no rivalry. PC and rivalry are mutually inconsistent, closest you can come in PM is moments of disequilibrium.
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What is the critical assumption H objects to about PC that is also assumed in discussions of imperfect C or M models? How is this critical assumption related to whether a C firm can PD?
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PM is assumed, you cant PD in C or M MODEL. however if you do you're either a "M" or in an imperfect market.
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Why does H object to the perfect knowledge assumption of PC? Is there any room in PC for search behavior as a result? Why would this mean real world search behavior might be considered by some as monopolistic? is there any search in M model? Why does the perfect knowledge assumption leave no room for advertising, undercutting, etc?
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If you know everything there are 0 search costs which is never the case in the RW. if multiple stories happen at the same time its not enough to know the stories, you also have to know how they interact. doesn't leave room for advertising, etc because you already know the best way to do everything. doesn't fit in C model so automatically in M.
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Why does the assumption of complete knowledge lead to the complete exclusion from the theory of PC all personal relationships existing between parties? On what sorts of RW markets would this still be true?
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Complete and IDENTICAL knowledge, if you knew everything about a person/product reputation wouldn't matter. reputation acts like a forfeitable bond. this would still be true on OE.
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In the absences of perfect knowledge, why is the competition for reputation or goodwill so crucial to the analysis? How does such competition introduce PV issues into the analysis? How would a complete standardization of commodities and contract terms rule out competition for reputation? Absent complete standardization, what forms could competition for reputation take?
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When perfect knowledge isn't available reputation is crucial because its like a forfeitable bond, someone has more to lose therefore you can trust them more. PV issues are relevant because there is a lasting effect of everything you do, i.e. raise prices, people will remember. complete standardization no point in reputation because that's all irrelevant. competition for reputation could be customer service, etc.
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Why does H say homogenization of goods and services arise from the nature of products, not intensity of C? Why would he object to describing the market for differentiated products as "less perfect" competition?
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Depends on what the product is to tell if you can std it, like used furniture, which can't be put on the PM. if you cant put it there, it shouldn't be imperfect competition, makes it sound like competition is imperfect but in reality its the product, you cant sell it on PM--that assumption is totally gone.
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What would geographic differences in production and consumption locations, combined with positive transportation costs, make PC results unlikely? Why do OE in such situations tend to require both an established direction of trade and a dominant transportation route?
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Once you add geographic space you have market power at that location because someone has already incurred costs to get there. therefore, to move you have to analyze if the potential benefit is worth the positive transportation cost. requires those two things because you need a large enough number of things and transactions to make setting up the OE worth it because you have to standardize it etc.
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When would someone find it in his self interest to completely std a product of an industry? Does it made sense to use a model which assumes products are standardized to evaluate markets where its not anyones interest to completely standardize their product?
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For further processing, value of standardization. in PC you wouldn't std because everything is already standardized and you wouldn't differentiate because everything is standard.
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Why would giving up the assumption of homogenous products lead to results that would within fairly wide margins be indeterminate?
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For homogenous products in PC only variable is Q so there is one definite eq. however, if you can choose a number of variables we cant determine what form competition will take place and what combination so its indeterminate. we just know for C must be sustainable and customer must value more than it costs.
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Why does H here reject the idea of comparing market results to the PC model to determine the extent of C?
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In a world outside of OE, P will never = MC, so if you use the deviance of that to determine monopoly power its a poor indicator, it basically says more about marketing than anything. also, PC doesn't have competition so hard to evaluate C in PC model.
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When would H say that the condition of static LR competitive eq be relevant? What must be true about tech? Growth in product demand? Development of new substitute of complementary products?
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Never. tech must stay the same, growth in product demand doesn't happen and no changes to substitutes and complementary products because that will change what type of plant you'd build.
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Why would H object to comparing the result of competition with those of restrictive licensing or government production by using a model which assumes the same cost curves in either case?
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Competitive firms would find ways to decrease costs, however government or restrictive licensing no incentive to reduce costs so higher costs. model assume costs are the same and equal, but thats not the case.
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