Mostly summarized from Gregory Mankiw’s Principles of Economics, 5 th Ed. PART 5 Firm Behavior and the Organization of Industry Chapter 17 of 36 Oligopoly Section 11 of 25 … Much of the world's oil is produced by a few countries. These countries make up an oligopoly. Their decisions about quantity of oil to pump and supply are the same as Jack and Jill's decisions about water. In 1960 an oil-producing countries cartel was formed, the Organization of Petroleum Exporting Countries (OPEC). Original members included Iran, Iraq, Kuwait, Saudi Arabia, and Venezuela. By 1973 these others had joined: Qatar, Indonesia, Libya, the United Arab Emirates, Algeria, Nigeria, Ecuador, and Gabon. … The OPEC countries have about three quarters of the world's oil reserves. OPEC, acting as an oligopoly tries to control the price of oil with coordinated limiting of quantity produced by setting production levels for each of the member countries. The problem OPEC ha...
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Mostly summarized from Gregory Mankiw’s Principles of Economics, 5 th Ed. PART 5 Firm Behavior and the Organization of Industry Chapter 17 of 36 Oligopoly Section 10 of 25 … Table 1 here … Figure 2 here … Figure 2 - Jack and Jill's Oligopoly Game In this game between Jack and Jill profit each earns from selling water depends on both the quantity he or she chooses to sell and the quantity the other chooses to sell. … The game oligopolists play in trying to reach the monopoly outcome is similar to the game two prisoners play in the prisoners' dilemma. Consider the choices for Jack and Jill, per Table 1. These two water suppliers negotiate and agree to keep production at 30 gallons each. The price will be kept at $60 and together they will earn the maximum total profit of $3600. After they agree on production levels of 30 gallons each they must decide whether to cooperate and live up to this agreement or to ignore it...
Mostly summarized from Gregory Mankiw’s Principles of Economics, 5 th Ed. PART 5 Firm Behavior and the Organization of Industry Chapter 17 of 36 Oligopoly Section 9 of 25 … Figure 1 here … Figure 1 - The Prisoners' Dilemma In this game between two criminals suspected of committing a crime. The sentence each receives depends both on · his or her decision whether to confess or remain silent · the decision made by the other prisoner … Oligopolies would like to reach the monopoly outcome, where profit is maximized. Doing so requires cooperation which can be difficult to establish and maintain. Game theory helps with analysis of the economics of cooperation. People often fail to cooperate even when cooperation would make them all better off. The prisoners' dilemma contains a general lesson that applies to any group trying to maintain cooperation among its members. … Consider the scenario of...
From How Asia Works: Success and Failure In the World's Most Dynamic Region. Joe Studwell. 2013. Kindle online sample. Section 1. From introduction: In How Asia Works, Joe Studwell distills his extensive research into the economies of nine countries - Japan, South Korea, Taiwan, Indonesia, Malaysia, Thailand, the Philippines, Vietnam, and China - into an accessible, readable narrative that -debunks Western misconceptions -shows what really happened in Asia and why -MAKES CLEAR WHY SOME COUNTRIES HAVE BOOMED WHILE OTHERS HAVE LANGUISHED … Studwell’s in-depth analysis FOCUSES ON THREE MAIN AREAS: LAND POLICY, MANUFACTURING, AND FINANCE. Land reform has been essential to the success of Asian economies, giving a kick-start to development by utilizing a large workforce and providing capital for growth. With manufacturing, industrial development alone is not sufficient, Studwell argues. Instead, countries need “export discipline,” a government that forces companies to compete on the ...
Profits Are Good, The More The Better, They Create Wealth, Jobs and Economy Growth First, watch this five minute video, “Profits Are Progressive” https://www.youtube.com/watch?v=tdHwewUuXBg … Figure 1 here … How do profits create wealth and economy growth? Inputs, including labor and raw materials, into Company A cost $100. Product created from those inputs sells for $110. The economy had $100 of wealth before but it now has $110. … Per Figure 1, potential competitors see the Q1 sales quantity and P1 prices and see or can estimate profits of Company A. They are incentivized to start up competing companies or start making the same product at their existing company. Competition among multiple suppliers results in · increased product supply, moving from Q1 to Q2 . increased employment because of the increase quantity produced · reduction of product price, from P1 to P2 Product quality and variety also increase due to competition. … In a market e...