Define sunk costs-fixed costs-economies of scale, Macroeconomics

Assignment Help:

Address the following issues concerning technological and strategic barriers to entry.

(a) Explain the role of economies of scale and (long run) fixed costs as technological barriers to entry. Argue that, even in the case of a natural monopoly, an incumbent monopolist may hold no market power when a market is contestable. In addition, discuss the role of sunk costs and the incumbents response lag in determining its market power (i.e.: the incumbents ability to command a profit).

Define sunk costs, fixed costs, economies of scale, natural monopoly and contestable markets as part of your answer, as well as all the technical terminology you use.

(b) Market incumbents may also rely on strategic barriers to entry. Describe the basic limit pricing model of strategic entry deterrence.

Explain why limit pricing arguments are sometimes said to rely on incredible threats. Using an entry deterrence game, explain the role of sunk actions (for instance, sunk investments) in making such incumbents threats credible.

 


Related Discussions:- Define sunk costs-fixed costs-economies of scale

Estimate the interest rate and minimize risk, 1. In December 1979 it was po...

1. In December 1979 it was possible to buy a January 1980 contract in gold at the New York Commodity Exchange for $487.50 per ounce and sell an October 1981 contract for $614.80 on

Millions of individual microeconomic decisions, Macroeconomics deals with t...

Macroeconomics deals with the economy as a whole. The millions of individual microeconomic decisions of the people, businesses, and government in their totality represent a nation'

Probability that a randomly selected person from the city, In a city of 120...

In a city of 120,000 people there are 20,000 Norwegians. What is the probability that a randomly selected person from the city will be Norwegian?

Major tenets of kant''s ethical theory, Please answer the question below re...

Please answer the question below relating it to BUSINESS in today's world. What are the major tenents of the ethical theory of Utilitarianism, and how would this theory be appli

Federal funds rate and supply and demand analysis, If banks expect an unusu...

If banks expect an unusually large increase in withdraws from checking deposit accounts in the near future, what would happen to the federal funds rate, borrowed reserves and nonbo

Internal market forces, what are some internal market forces and how is the...

what are some internal market forces and how is the outcome of output, jobs, prices, growth, and international balance

Explain about labor market in as-ad model, Q. Explain about Labor Market  ...

Q. Explain about Labor Market  in AS-AD model? In AS-AD model, economy will always be on the response curve - the thick line in chart below.  Figure: The labor in the

Crowding out would most likely occur, Crowding out would most likely occur ...

Crowding out would most likely occur when: A. the Congress enacts budget cuts to balance the budget. B. workers lose jobs as a result of anti-inflationary fiscal policies. C. the f

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd