Skip to main content
44 votes

Why does Taiwan dominate the semiconductors market?

This is because semiconductors have economies of scale over extremely large number of units produced. Economies of scale mean that the more you produce the cheaper production gets. Many firms will ...
1muflon1's user avatar
  • 57.3k
30 votes
Accepted

Do companies have non compete agreements between each other?

This is known as dividing markets or market allocation, and it is against the law in the US, the EU, and I imagine in most countries with antitrust laws.
Giskard's user avatar
  • 29.5k
14 votes

In microeconomics : is this the contradiction in the atomicity of firms ?

A price-taking firm takes prices as given, but that does not mean that the firm cannot influence prices; it just means that the firm ignores its own impact on prices. Now the question is how sensible ...
Michael Greinecker's user avatar
10 votes
Accepted

Why bankrupt firms continue to operate?

Declaring bankruptcy is a way to prevent creditors from seizing assets and pursuing lawsuits to recover what they are owed in a piecemeal fashion. It forces all parties to wait for a judgement that ...
Brian Romanchuk's user avatar
7 votes
Accepted

In microeconomics : is this the contradiction in the atomicity of firms ?

This does sound a lot like the “contradiction” that Keen tries to derive. The key to resolving it is to remember that firms are small relative to the market, so $$\frac{\mathrm dQ}{\mathrm dq_i} = 0.$$...
Theoretical Economist's user avatar
7 votes
Accepted

Why do we spread knowledge across nations?

This is a long comment that is too long for the comment box. In fact, many research projects in US are secretive, especially the ones related to military. At the same time, much, much more research ...
High GPA's user avatar
  • 1,936
6 votes

Is net neutrality not important in a competitive market of internet providers?

The viewpoint is this. The ISP is responsible for relaying internet traffic to their customers - they have different models for this, by "speed", by amount of data, etc and this is working reasonably ...
Stian's user avatar
  • 159
6 votes
Accepted

Intermediate Case of Bertrand and Cournot

These papers could be interesting to you. First, a classical contribution: Singh Nirvikar and Xavier Vives, 1984. "Price and Quantity Competition in a Differentiated Duopoly," RAND Journal of ...
Bertrand's user avatar
  • 3,371
6 votes

Why have so many legitimate smaller biotechs sprung up and thrived?

I would prefer to take a broader tact with this: Why aren't all firms bought at a smaller size? Why are there any small R&D firms? One answer is related to uncertainty. Some firms look like they ...
RegressForward's user avatar
5 votes

Why do some perfectly competitive, loss-making firms shutdown and others don't?

$AVC<AR$ means, without considering fixed cost, the firm is making a profit of $AR-AVC>0$ per unit of output. Compare the two options: keep producing vs shutdown: Keep producing: $\text{Avg ...
Herr K.'s user avatar
  • 15.5k
5 votes
Accepted

Competitive vs complete and non-competitive vs incomplete marekts

Complete market is a market where every possible asset or good can be assigned a price and where you have perfect information, can make perfect contracts and zero transaction costs. Any market can be ...
1muflon1's user avatar
  • 57.3k
4 votes
Accepted

Why does demand curve shift in, in a monopolistic competitive market?

Demand for existing firms' product shifts in because the entering firms attract some of the users.
dimitriy's user avatar
  • 1,135
4 votes

Is the marginal cost the same for every firm in a perfectly competitive market?

No, the marginal cost curves are not necessarily the same for each firm in the market. However the values of marginal costs are. To disprove the general claim that "The marginal cost curve of each ...
BB King's user avatar
  • 6,238
4 votes
Accepted

Non-constant returns to scale and competitive factor markets

Frankel examines the use of the Cobb-Douglas formulation in aggregate data, where as a matter of macroeconomic(and essentially logical) identity output is exhausted in paying the factors of production....
Alecos Papadopoulos's user avatar
4 votes

Why does competition work for capitalism?

Competition "works" in capitalism in the sense that society, as a whole, is provided with the maximum possible quantity of goods for a price which gets close to the cost of producing the good. ...
JoaoBotelho's user avatar
  • 2,155
4 votes

Do companies have non compete agreements between each other?

Real life is more complicated than that. For example Companies A and B might be competing in the same market sector, but then collaborate on producing a new product aimed at a particular niche in the ...
alephzero's user avatar
  • 451
4 votes

Measuring effects of degree of (buyer) competition on price: references

You might be looking for the term monopsony power or perhaps oligopsony power. A superficial look at the literature indicates that the Herfindahl-Hirschman index (HHI), so commonly used in assessing ...
BKay's user avatar
  • 16.3k
4 votes
Accepted

What has been the reception of Posner & Weyl’s claim that property rights lead to market power?

In narrow sense of the word the article was definitely peer reviewed as it was published in Journal of Legal Analysis. But in this narrow sense it was most likely peer reviewed by jurists not ...
1muflon1's user avatar
  • 57.3k
4 votes
Accepted

Does the Labor Theory of Value hold in the long term in competitive markets?

No it does not for several reasons. Labor theory of value (LTV) central tenant is that there is some intrinsic component to value determined objectively by labor (see Brue and Grant History of ...
1muflon1's user avatar
  • 57.3k
4 votes
Accepted

How are real income and utility the same thing?

Real income and utility are not the same thing but utility can be expressed as a function of income because income is what allows you to consume goods and services. For example, let us assume there ...
1muflon1's user avatar
  • 57.3k
4 votes

How can we explain quantity competition and price taking?

When I studied the basic principles of microeconomics, a price-setting monopoly made perfect sense to me, but price-taking firms under perfect competition never did. No single firm can influence the ...
1muflon1's user avatar
  • 57.3k
3 votes

Competition and welfare - empirical evidence

Here is a fact sheet by the OECD about the effects of competition. It is mostly concerned with growth and productivity, but also discusses the effects on poor consumers and prices. It cites a wide ...
hrrrrrr5602's user avatar
3 votes
Accepted

Hayek's defense of competition regulation

This article states: In both of his seminal works in political theory, The Constitution of Liberty and Law, Legislation and Liberty, Hayek endorsed as a legitimate function of the ...
luchonacho's user avatar
  • 8,601
3 votes
Accepted

What exactly is a trust?

Wikipedia has an article worth reading. An American trust was typically a combination of companies operating effectively as an entity with dominant market power, so perhaps somewhere between a cartel ...
Henry's user avatar
  • 4,765
3 votes

Adam Smith and wage gap?

Yes, Smith addresses these issues in Book 1 Chapter 10 of The Wealth of Nations. Firstly, he notes that where two jobs are in almost every respect equivalent, we should expect them to pay the same ...
Ubiquitous's user avatar
3 votes

How can perfectly competitive firms earn zero profits?

First, let's deal with the semantics and terminology aspect: what the word "profit" means in Economics, and what the word means in the everyday/business/accounting use, are two different things. In ...
Alecos Papadopoulos's user avatar
3 votes
Accepted

What would you call a real market that is close to perfect competition?

I don't think there is a standard term for what you'd want to refer to. I'd consider the following good candidates though: Near-perfect / almost-perfect / close-to-perfect / epsilon-perfect ...
Herr K.'s user avatar
  • 15.5k

Only top scored, non community-wiki answers of a minimum length are eligible