完全競爭Perfect Competition

Opening up the big boxFeb 23rd 2006

From The Economist print edition

Measuring the Wal-Mart effect The Waltons, the founding family of Wal-Mart, opened their first store in the state in 1962. Wal-Mart now has 3,800 shops nationwide. The discount retailer is the world's biggest company by sales: a record $312.4 billion in the last fiscal year, according to figures released this week.

Measuring the Wal-Mart effect

The Wal-Mart Effect”, Charles Fishman notes that he could read all of the significant academic papers on the company's impact on prices jobs suppliers competitors

in a couple of afternoons at the library. This was partly due to a “paucity of data”, writes Emek Basker, an economist at the University of Missouri, whose requests for numbers from the company were denied.

America is home to more Wal-Mart employees (1.3m) than high-school teachers. A typical store is manned by 150-350 people; the bigger “supercentres”, which sell groceries, employ 400-500. But even as Wal-Mart creates some jobs, it displaces others. What is the net effect?

Global Insight, a research company

“new businesses spring up near Wal-Marts and existing stores flourish as they take advantage of the increased customer flow to and from our stores.”

Global Insight reckons that a 100,000 square-foot (9,300 square-metre) Wal-Mart creates 97 retail jobs,

after the dust has settled, but destroys 30 in wholesale.

This result may, however, be flawed—for the familiar reason that correlation does not prove causation. ( 因果缪誤 )

Wal-Mart, after all, does not set up shop at random. All else equal, it is presumably attracted to

relatively thriving retail markets, with robust sales and hence strong employment.

Its entry into a neighbourhood may be the result, not the cause, of high retail employment there.

David Neumark, Junfu Zhang and Stephen Ciccarella, of the Public Policy

Institute of California, a think-tank

measuring the impact of one thing (exposure to Wal-Mart) on another (the health of local retailing). They use a proxy for the first variable that is not itself affected by the second.

That proxy is distance, measured in miles from Bentonville, the company's place of origin.

Wal-Mart spread like a “wave”, rippling outwards from its Arkansas epicentre in a widening circle.

It reached California only in 1990 and New England a year later. The greater a county's distance from Bentonville, the later Wal-Mart's arrival there, regardless of the county's retailing appeal.

The authors track Wal-Mart's progress through 3,032 counties from 1977 to 1995.

The arrival of a store in a typical county destroys about 180-270 retail jobs, they conclude, which suggests that each Wal-Mart associate does the job of 1.5-1.75 people at a rival.

However, this does not imply a rise in overall joblessness: those displaced by Wal-Mart will tend to find work elsewhere.

What about wages?

Mr Neumark and his colleagues estimate Wal-Mart's impact on retail payrolls, which averaged $13,860 per worker in their sample.

The opening of a Wal-Mart store reduces these by only about 1%.

Whether this was because hours shorten, wages fall or low-paid jobs displace well-paid jobs, they could not tell.

The other side of the coin

Wal-Mart may shave payrolls, but it slashes shopping bills—even for people who never shop there.

Ms Basker estimates that the prices of goods such as toothpaste, shampoo, aspirin and laundry detergent fall by 7-13% five years after Wal-Mart's arrival in a city.

Messrs Hausman and Leibtag reckon the existence of big-box retailers, such as Wal-Mart, is a substantial boon to shoppers—equivalent to offering households 25 cents back for every dollar they spend on groceries, or about $450 a year on average.

Some of Wal-Mart's detractors think it “cheerless”, others mean.

But what Wal-Mart saves on its payrolls it passes on to consumers. There are two sides to every penny it pinches.

什麼樣的競爭環境使廠商很有效率，消費者不會被剝削？

完全競爭市場的重要特性這些特性如何影響廠商長、短期產量這些特性如何影響廠商長、短期價格與利潤

消費者有很多選擇產品沒有特色消息又快又正確沒有舉足輕重的大廠商也沒有舉足輕重的大客戶

Competition

Perfect competition is an industry in which:Many firms sell identical products to many

buyers.There are no restrictions to entry into the

industry.Established firms have no advantages over

new ones.Sellers and buyers are well-informed about

prices.

Competition

How Perfect Competition ArisesWhen a firm’s minimum efficient scale is

small relative to market demand so there is room for many firms in the industry

And when each firm is perceived to produce a good or service that has no unique characteristics, so consumers don’t care which firm they buy from

Competition

Price Takers In perfect competition, each firm is a price taker. A price taker 價格接受者 is a firm that cannot

influence the price of a good or service. No single firm can influence the price—it must

“take” the equilibrium market price. Each firm’s output is a perfect substitute for the

output of the other firms, so the demand for each firm’s output is perfectly elastic.

Competition

Economic Profit and RevenueThe goal of each firm is to maximize

economic profit, which equals total revenue minus total cost.

Total cost is the opportunity cost of production, which includes normal profit.

A firm’s total revenue equals price, P, multiplied by quantity sold, Q, or P Q.

Competition A firm’s marginal revenue is the change in total

revenue that results from a one-unit increase in the quantity sold.

因為個別廠商都很小，不需降價吸引顧客，在市場價格下即可將所有產品賣出

The Firm’s Decisions in Perfect Competition

A perfectly competitive firm faces two constraints:

A market constraint summarized by the market price and the firm’s revenue curves

A technology constraint summarized by the firm’s product curves and cost curves (like those in Chapter 10)

The Firm’s SR Decisions in Perfect Competition

短期的決策 : 產量 >0 ? 產量應該多少 ( 使自己利潤最大 )?

Whether to produce or to shut down.If the decision is to produce, what quantity to

produce.

A firm’s long-run decisions are:

長期的決策 : 適當的規模是什麼？要繼續留在這一行嗎？Whether to increase or decrease its plant

size.

Whether to stay in the industry or leave it.

The Firm’s Decisions in Perfect Competition

利潤最大的產量Profit-Maximizing Output

Π= TR-TC

=p*q – TVC - TFC

毛衣廠商的利潤 p=25

Quantity TR TC ( 假設 ) π =TR-TC

0 0 22 -22

4 100 100 0

8 200 160 40

9 225 183 42

11 275 245 30

13 325 360 -35

The Firm’s Decisions in Perfect

Competition

Part (a) also shows the total cost curve, TC, which is like the one in Chapter 10.Total revenue minus total cost is profit (or loss), shown in part (b).

The Firm’s Decisions in Perfect

Competition Profit is maximized

when the firm produces 9 sweaters a day.

At low output levels, the firm incurs an economic loss—it can’t cover its fixed costs.

At intermediate output levels, the firm earns an economic profit.

At high output levels, the firm again incurs an economic loss—now it faces steeply rising costs because of diminishing returns.

The Firm’s optimal output in Perfect Competition

Marginal Analysis

the profit-maximizing output.

profit is maximized by producing the output at which marginal revenue, MR, equals marginal cost, MC.

The Firm’s Decisions in Perfect Competition

If MR > MC, economic profit increases if output increases.

If MR < MC, economic profit decreases if output increases.

If MR = MC, economic profit decreases if output changes in either direction, so economic profit is maximized.

The Firm’s Decisions in Perfect Competition

In part (c) price is less than ATC and the firm incurs an economic loss—economic profit is negative and the firm does not even earn normal profit.

The Firm’s Short-Run Supply Curve

A perfectly competitive firm’s short-run supply curve shows how the firm’s profit-maximizing output varies as the market price varies, other things remaining the same. Because the firm produces the output at which

marginal cost equals marginal revenue, and because marginal revenue equals price, the firm’s supply curve is linked to its marginal cost curve.

But there is a price below which the firm produces nothing and shuts down temporarily.

Temporary Plant Shutdown

If the price is less than the minimum average variable cost, the firm shuts down temporarily

and incurs a loss equal to total fixed cost..

短期如關門 q=0,

損失為 FC( 沉沒成本 )

是否營運 ?

比較營運損失是否 小於關門損失 FC

營運： q > 0π= TR – TC

π １ = TR – TC = TR – ( TVC + TFC)

=(TR-TVC)-TFC

不營運： q = 0

π ２ = - TC = - TFC

營運：

πQ>0 >πQ=0 則營運 即 TR – (TVC + TFC) > - TFC

即 TR – TVC > 0

即 收益至少能支付變動成本　

MC 在 AVC 之上的部分為完全競爭廠商之供給線

P=MR=MC 決定產量收益不能支付變動成本時產量 =0

The Firm’s shutdown point

If price equals minimum average variable cost, $17 in this example, the firm is indifferent between producing nothing and producing at the shutdown point, T.

the firm’s short-run supply curve

The blue curve in part (b) traces.

If the price is $31, the firm produces 10 sweaters a day, the quantity at which P = MC.

The Firm’s supply curve

At a price equal to minimum average variable cost—the shutdown price—the industry supply curve is perfectly elastic because some firms will produce the shutdown quantity and others will produce zero.

產業的供給

個別廠商供給的水平加總s1 s2s

9 716

Output, Price, and Profit in Perfect Competition

A Change in Demand An increase in demand

brings a rightward shift of the industry demand curve: the price rises and the quantity increases.

short-run equilibrium in Perfect Competition

a firm may earn an economic profit, earn normal profit, or incur an economic loss.

為什麼 WTO 取消出口補貼會引起多國農民的反彈 ?

農產品同質性 (homogeneity) 很高全球各類農產品供給者數量龐大全球各類農產品消費者者數量龐大價格資訊相當完全接近完全競爭廠商成本結構很重要

出口補貼 ( 變動補貼 ):降低農產品成本

q

p

Q

D

S

P

未受補貼的 ATC

受補貼的 ATC

MCMC

q*q*’

出口補貼 ( 非變動補貼 ):降低農產品成本

q

p

Q

D

S

P

未受補貼的 ATC

受補貼的 ATC

MC

q* q*’

Long-Run Adjustments

In the long run, the firm may: Enter or exit an industry Change its plant size

Entry and Exit

New firms enter an industry in which existing firms earn an economic profit.

Firms exit an industry in which they incur an economic loss.

Output, Price, and Profit in Perfect Competition

As new firms enter an industry, industry supply increases.

The industry supply curve shifts rightward.

The price falls, the quantity increases, and the economic profit of each firm decreases.

Output, Price, and Profit in Perfect Competition

As firms exit an industry, industry supply decreases.

The industry supply curve shifts leftward.

The price rises, the quantity decreases, and the economic profit of each firm increases.

Changes in Plant Size

Firms change their plant size whenever doing so is profitable.

If average total cost exceeds the minimum long-run average cost, firms change their plant size to lower costs and increase profits.

Change Plant Size to increase π

But if the LRAC curve is sloping downward at the current output, the firm can increase profit by expanding the plant.

Output, Price, and Profit in Perfect Competition

As the plant size increases, short-run supply increases, the price falls, and economic profit decreases.

Output, Price, and Profit in Perfect Competition

Long-run equilibrium occurs when the firm is producing at the minimum long-run average cost and earning zero economic profit.

Long-Run Equilibrium

Economic profit is zero, so firms neither enter nor exit the industry.

Long-run average cost is at its minimum, so firms don’t change their plant size.

Changing Tastes 1( 消費者偏好減低 但技術不變 )

A Permanent Change in Demand A decrease in demand shifts the demand curve

leftward. The price falls and the quantity decreases.

Changing Tastes 2

the fall in price puts the price below each firm’s minimum average total cost and firms incur an economic loss.

Economic losses induce exit, which decreases short-run supply and shifts the short-run industry supply curve leftward.

As industry supply decreases, the price rises and the market quantity continues to decrease.

Changing Tastes 3

With a rising price, each firm that remains in the industry increases production in a movement along the firm’s marginal cost curve (short-run supply curve).

Changing Tastes 4

A new long-run equilibrium occurs when the price has risen to equal minimum average total cost so that firms do not incur economic losses, and firms no longer leave the industry.

Changing Tastes 5

The main difference between the initial and new long-run equilibrium is the number of firms in the industry.

原先 n0=Q0/q0, 現在 n1= Q2/q0 廠商數目減少

Changing Tastes 6

In the new equilibrium, a smaller number of firms produce the equilibrium quantity.

僅有需求面改變時，最適規模未改變

A permanent increase in demand

has the opposite effects to those just described. An increase in demand shifts the demand curve

rightward. The price rises and the quantity increases.

Economic profit induces entry, which increases short-run supply and shifts the short-run industry supply curve rightward.

As industry supply increases, the price falls and the market quantity continues to increase.

Changing Tastes and Advancing Technology

A new long-run equilibrium occurs when the price has fallen to equal minimum average total cost so that firms do not earn economic profits, and firms no longer enter the industry.

The main difference between the initial and new long-run equilibrium is the number of firms in the industry. In the new equilibrium, a larger number of firms produce the equilibrium quantity.

Long-Run Equilibrium

P = MC = AC

利潤為零，且在 LRAC 最低點LRAC 是完全競爭廠商的長期供給線

偏好和技術進步對長期均衡的影響

External Economies and DiseconomiesThe change in the long-run equilibrium

price following a permanent change in demand depends on external economies and external diseconomies.

產業產量改變時，外在環境影響生產成本非單一廠商自己所能控制External economies ( 外部經濟 )External diseconomies ( 外部不經濟 )

External economies ( 外部經濟 )

are factors beyond the control of an individual firm that lower the firm’s costs as the industry output increases.

External diseconomies ( 外部不經濟 )

are factors beyond the control of a firm that raise the firm’s costs as industry output increases.

Constant cost

In the absence of external economies or external diseconomies, a firm’s costs remain constant as industry output changes.

Changing Tastes and Advancing Technology

in the absence of external economies or external diseconomies, the price remains constant when demand increases.

external diseconomies

when external diseconomies are present, the price rises when demand increases.

external diseconomies

the market for defense goods like nuclear submarines or stealth bombers would be an example of external diseconomies.

If the government desired to contract with private firms for a significant increase in the number of these machines, many different firms might enter the market,

raising the demand for scientists and engineers with rare technical skills and expertise (unique human capital).

The wages of these highly skilled workers would increase, raising the cost per unit of production.

external economies

New York City’s financial districts, or Silicon Valley’s high technology industries.

Sometimes close locational proximity of mobile and abundant, highly specialized laborers can decrease the cost of doing business in that area, resulting in firms experiencing falling costs per unit of production.

external economies

Figure 11.11(c) shows that when external economies are present, the price falls when demand increases.

Technological Change

New technologies are constantly discovered that lower costs.

A new technology enables firms to produce at a lower average cost and lower marginal cost—firms’ cost curves shift downward.

Firms that adopt the new technology earn an economic profit.

Advancing Technology

New-technology firms enter and old-technology firms either exit or adopt the new technology.

Industry supply increases and the industry supply curve shifts rightward.

The price falls and the quantity increases. Eventually, a new long-run equilibrium emerges in

which all the firms use the new technology, the price has fallen to the minimum average total cost, and each firm earns normal profit.

Effects of Advancing Technology

The adjustment process as old-technology firms exit or adopt the new technology and new-technology firms enter can create great changes in local geographic prosperity.

Some regions experience economic decline while others experience economic growth.

Competition and Efficiency

Efficient Use of ResourcesResources are used efficiently when no

one can be made better off without making someone else worse off.

This situation arises when marginal benefit equals marginal cost.

Choices, Equilibrium, and Efficiency

從社會的角度思考完全競爭均衡的效率性：我們運用資源制製造產品，得到的是什麼 ?

We can describe an efficient use of resources in terms of the choices of consumers and firms coordinated in market equilibrium.

社會的利益面 : 需求

We derive a consumer’s demand curve by finding how the best (most valued by the consumer) budget allocation changes as the price of a good changes.

So consumers get the most value out of their resources at all points along their demand curves, which are also their marginal benefit curves.

社會的付出面 : 供給We derive a competitive firm’s supply

curve by finding how the profit-maximizing quantity changes as the price of a good changes.

So firms get the most value out of their resources at all points along their supply curves, which are also their marginal cost curves.

Competition and Efficiency

In competitive equilibrium, the quantity demanded equals the quantity supplied, so marginal benefit equals marginal cost.

All gains from trade have been realized.

Competition and Efficiency

efficient outcome in a perfectly competitive industry.

Along the demand curve D = MB the consumer is efficient.

Along the supply curve S = MC the producer is efficient.

Competition and Efficiency If the quantity produced

were Q0, marginal benefit B0 would exceed marginal cost C0 and everyone would be better off if production increased.

If the quantity produced were Q*, marginal benefit would equal marginal cost at P*.This outcome is efficient.

Competition and Efficiency The quantity Q* and

price P* are the competitive equilibrium values.

The consumer gains the consumer surplus,

and the producer gains the producer surplus.

市場的效率 1

以價格作為資源分配的指標使資源留在最適合自身 ( 賺取最高利潤，得

到最高效用 ) 的市場Competitive equilibrium is efficient only if

there are no external benefits or costs. 市場的價格機能

市場的效率 2

Competitive equilibrium is efficient only if there are no external benefits or costs.

市場可能失靈External benefits ( 外部成本 ) are benefits

that accrue to people other than the buyer of a good.

External costs ( 外部效益 ) are costs that are borne not by the producer of a good or service but by someone else.

Efficiency of Perfect Competition

Three main obstacles to achieving efficiency in resource allocation are:

Monopoly Public goods External costs and benefits

Monopoly

restricts output to increase price and profit—Chapter 12 examines monopoly.

Public goods

Public goods are goods from which everyone benefits but no one would willingly pay, so a competitive market would produce a quantity below the efficient level—Chapter 16 examines public goods.

External costs and benefits

External costs or benefits mean that demand curves do not measure all the benefits and cost curves do not measure all the costs, so the competitive market might produce too much or too little—Chapter 18 examines externalities.

市場的特性 I完全競爭市場

定義：一產業由許多同質 (homogeneous) 小廠商組成，供應同質產品，享有完全資訊 (perfect information) ，廠商都是價格的接受者 (price-taker) ，自由進出市場 (no entry barrier) ，且廠商數目極多．例：稻米，當中廠商的行為： price-taker ～決定產量

最適產量的決定 MR = MC

MR = AR = P ，是否保証利潤 > 0?

是否一旦賠錢便立即關廠？ NO.

殺頭生意有人做，賠本生意沒人做？

短期如關門 FC 沉沒成本為損失比較損失是否 < FC

長期如關門處分資本， < = FC

營運： Q > 0π= TR – TC

π １ = TR – TC = TR – ( TVC + TFC)

不營運： Q = 0

π ２ = - TC = - TFC

營運：

則 πQ>0 >πQ=0

即 TR – (TVC + TFC) > - TFC

即 TR – TVC > 0

即 收益至少能支付變動成本　　　 MC 在 AVC 之上的部分為完全競爭廠商之供給線

長期與短的差別

短期間各廠商可能有利潤 > or < 0 之狀況 ( 成本決定利潤 )

但長期間，加入 S ↑( 利潤 >0) ，且完全資訊，所以有加入者　　　　　退出 S ↓( 利潤 <0) 　

長期均衡

P = MC = AC

利潤為零，且在 LRAC 最低點LRAC 是長期供給線

完全競爭與效率

在長期中，每一廠商在 LRAC 之最低點，因此為最有效率的生產效率

完全競爭市場之所以能使資源有效率的分配，是建立在特定假設之下的結果其中市場的完全資訊，產品的同質性在現實生活中往往達不到故而劣幣驅逐良幣的狀況並不罕見例如beta 被 VHS 取代 IBM (compatible) 在市佔率上遠超過 Apple