Czarny, Mariusz Poland Unknown Project Manager Building Consultancy @ Czerwińska Nojszewska, Patrycja Poland Warsaw. Monopoly – exercises 1 Exercise (E. Czarny, E. Nojszewska, Mikroekonomia – zbiór zada ń) The monopolist’s inverse demand function is given by: P (q). Exercise (E. Czarny, E. Nojszewska, Mikroekonomia – zbiór zada ń) The price elasticity of demand for the good produced by a monopoly is equal to –3.

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The collision of rational business with competition law results in adverse external effects characteristic for market failure.

The first stage consists of an evaluation of the character of the relevant market — the search for cartelfacilitating factors. In the second stage, an analysis of the trade policy of the companies participating in an alleged cartel is undertaken and its consistency assessed with an operating scheme of a cartel agreement described in the economics of competition law. Role of economic analysis in anti-cartel proceedings IV.

The economics of competition law mentions the following factors facilitating cartel collusions Cabral, Introduction to Industrial Organization, Cambridgenojsszewska. Theory and Practice, Cambridgep. Actual prices result from negotiations among sellers and buyers.

Calaméo – Economic Approach to Counteracting Cartels

It is likely that the weak discipline of Polish cartels results from a general lack of social capital the inability to co-operate among Poles in various areas including, czzrny probably, csarny cartel agreements. In case of an oligopoly offering homogeneous products such as cement, steel or flourthe product brand is not the key determinant for customers — instead they consider the price to be the primary selection criterion on such markets facilitating price competition between existing market players.

Competition law should be applied only in cases when the competition authority can prove the existence of an overt collusion but not in cases of tacit ones.

Production quota fixing is a substitute for price-fixing, if the prices result from an attempt to maximize the profit of the seller and price negotiations with buyers, then production quotas must result from czarjy cost-price analysis.


Competition law finds justification in microeconomic theory, and not only in the concept of social deadweight loss4, but also in the concept explaining the essence, reasons and ways to minimize market failures5. The Law of Competition and its Practice, St. While the effects of such parallelism may indeed be similar to those associated with agreements between competitors, however the mechanism of obtaining those results is different.

Economic Approach to Counteracting Cartels

Analysis and Antitrust Implications, New York Nojwzewska authorities are thus required 10 Ibidem, p. Summary Prices convergence on a market for goods traded by various producers, concentration of their basic product quotas in a particular territory and relative stability of their market shares czarjy do not always have to indicate the existence of an agreement between the players on that market.

Hovenkamp, Federal Antitrust Policy. Second, market division may result from agreements but not always does seeing as transport coasts should also be taken into consideration.

Second Edition, West Publishing Easterbrock, Antitrust Cases…, p. In reality, a conflict between business goals and competition law principles is often apparent. His model was further developed by Heinrich von Stackelberg who presumed that one of the members of the duopoly knew that its competitor was following the principles of the Cournot model.

Instead, they often nojszeeska a form of market research directed at shaping the individual actions of participating companies, which may be interdependent from the plans of their competitors. The structural explanation of the monopoly phenomenon, associated with the Harvard School, consists of the application of a Fzarny — Conduct — Performance paradigm.

First, price-fixing is effective when: Principle and Execution, Harvardp. It is doubtful whether a convergence of market actions of competitors may at all be defined as collusion, even a tacit one. Microeconomics explains it as generating economic profit when intersectorial differentiations cause capital flows from less to more effective applications until the economic profit reaches zero level, where the economy is in competitive equilibrium Criteria and consequences of effectiveness of cartels VI.

How important is an economic analysis for the results of anti-cartel proceedings considering that they are prohibited per se, that is, absolutely and unconditionally? For instance, if a company using its dominant position in a relevant market increases its prices above the level found in a competitive market, then the high level of monopolistic yield encourages market entry by potential competitors. Conduct of competitors in an oligopoly is explained by the interdependence theory formulated by Augustin Cournot.


Third, the volume of production is related to natural markets and their demand. The main characteristics of oligopoly include: Nojszewska, Mikroekonomia, Warszawap. The evaluation of actual prices requires an analysis of prices in a particular period.

Thus, depending on the physical and chemical properties of the goods, the producer may be selling its products in a particular territory not as a result of an agreement between competitors, but due to the optimization of trade logistics.

Additional demand for cheaper goods may only be satisfied subject to production increase. This justifies the implementation of particularly severe restrictions against agreements between competitors caarny at price fixing, setting production and sales quotas, czany markets, setting other terms of trade or the exchange of sensitive information Principle and Execution, Harvard This process is limited by entry and exit barriers For example, Herbert Hovenkamp states that the application of competition law is necessary if administrative intervention into market processes is economically justified9.

Williamson, Markets and Hierarchies. This is essential for increasing market transparency which may be facilitated by the following factors: Second Edition, West Publishing Particularly in the Polish economy, market dynamics causes the relevant data to be impossible noojszewska compare in the longer term because it is not long since most companies introduced electronic accounting and statistics systems that could provide such data in general, this is a period after the year Very often buyers use prices offered by one seller as an argument in a transactional nosjzewska with other sellers.