30 votes
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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.
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22 votes
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Why is collective bargaining by a group of employees not the same thing as price-fixing?

This is more of an elaboration of The Almighty Bob's answer: It is true that if we start from a competitive market (i.e. large numbers of buyers and sellers), then granting market power to sellers (e....
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14 votes
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Is net neutrality not important in a competitive market of internet providers?

Yes, if there were more competition then net neutrality would not be such a big issue. Any throttling would cause an ISP to lose customers to competitors. Competition is a main assumption behind why ...
13 votes

Why is collective bargaining by a group of employees not the same thing as price-fixing?

I think your question has two parts: Is a labor union a cartel? Is a labor union therefore illegal? Let me give you the quick answer to both: 1) yes, 2) no. The longer version is the following: ...
13 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 ...
10 votes
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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 ...
9 votes
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Why wouldn't competition prevent "usurious" payday loan rates?

The posted quote is economic nonsense. If a lender chooses to innovate and reduce cost to borrowers in order to secure a larger share of the market, the competing lenders will instantly do the same,...
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9 votes

Why don't Burgers cost 5 cents?

What he's saying is that once the burger is already made, the cost of making the burger is a sunk cost, and thus the marginal cost of the burger is just the cost of the tiny labor involved in picking ...
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8 votes
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Why don't Burgers cost 5 cents?

This question really forces one to think about the role that quantity plays in the competitive equilibrium. The two main points that, I think, explain the way this works are: The market quantity is ...
7 votes
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Monopolistic and Bertrand (Nash) Competition

The following paper compares the efficiency of the Bertrand and Cournot game in the case of product differentiation. However, their utility function is more general than the Dixit/Stiglitz case. You ...
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7 votes
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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 $$\frac{\mathrm dQ}{\mathrm dq_i} = 0.$$...
7 votes
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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 ...
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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 ...
6 votes
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What is the difference between Herfindahl Index and the Concentration Ratio

From the Industrial Organization by Belleflame and Petiz (Page 34/35, Chapter 2): While the m-firm concentration ratio adds market shares of a small number of firms in the market, the so-called ...
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6 votes
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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 ...
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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 ...
5 votes

Why don't Burgers cost 5 cents?

You might want to read up on repeated games. You are right, in a one-period model, once produced, the seller has little marginal cost, so could potentially sell at any price. However, his price at $...
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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 ...
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5 votes
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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 ...
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4 votes

Why is Uber worth almost as much as Boeing?

A big part of the answer to this question must surely be network effects. Yes, Ford has a lot of engineering talent. But so has GM. This means that Ford has to compete with GM to sell cars, and this ...
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4 votes
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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.
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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. ...
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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 ...
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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 ...
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4 votes
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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 ...
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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 ...
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3 votes
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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 ...
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