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MARKET POWER,PRICING STRATEGIES, ECONOMIC
EFFICIENCY AND WELFARE

Market Power

Pricing power
Entry barriers
Monopsony
Supply chain control
Economies of scale

Economic Efficiency

The fundamental economic problem is a scarcity of resources.
concerned with the optimal production and distribution or these
scarce resources.

There are different types of efficiency

1. Productive…

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When firms do not have incentives to cut costs, therefore a firms
average cost may be higher than necessary.

4. Efficiency of scale

when the firms produces on the lowest point of its Long run
average cost and therefore benefits fully from economies of scale

5. Dynamic efficiency

efficiency over…

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Pricing Strategies

Aims: sell excess stock, extra revenue, increase profit,
improved cash flow
1st degree: consumer surplus is known so sold at that price e.g.
ebay
2nd degree: when a firm has surplus capacity so sells at a lower
prices to attract people who would not usually buy e.g. £1…

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An example of a monopsony occurs when there is one major employer and
many workers seeking to gain employment.
If there is only one main employer of labour, then they have market power in
setting wages and choosing how many workers to employ.
Coal mine owner in town where coal…

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Monopsony in Product Markets
In several industries there is one buyer and several sellers.

Supermarkets have monopsony power in buying food from farmers. If farmers don't
sell to the big supermarkets, there are few alternatives.

Amazon.com is one of the biggest purchases of books. If publishers don't sell to
Amazon…

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This is a summary of the types of efficiency, price discrimination, pricing strategy and monopsony.

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