Worst-Case Bounds on R&D and Pricing Distortions: Theory and Disturbing Conclusions if Consumer Values Follow the World Income Distribution Michael Kremer.

Slides:

Advertisements

Similar presentations

Copyright © 2006 Thomson Learning 9 Application: International Trade.

Advertisements

International Economics

RENT SEEKING Using resources to get monopoly power. Firms are willing to spend up to the amount of monopoly profit which could be made, to make a monopoly.

1 Intermediate Microeconomics Equilibrium. 2 Partial Equilibrium We have now derived both the market demand curve (Q d (p)) and market supply curve (Q.

Review of Results from Double Auctions 20 different markets 10 buyers and 10 sellers in each market – the 5 buyers and 5 sellers on page plus.

Difficult Topics in Microeconomics: Tax analysis Luis Fernandez And Teresa Fischer.

Monopoly Outline: Outline: Characteristics of a monopoly Characteristics of a monopoly Why monopolies arise? Why monopolies arise? Production and pricing.

3 SUPPLY AND DEMAND II: MARKETS AND WELFARE. Copyright © 2004 South-Western 7 Consumers, Producers, and the Efficiency of Markets.

Chapter Application: The Costs of Taxation 8. The Deadweight Loss of Taxation Tax on a good – Levied on buyers Demand curve shifts downward by the size.

Ch. 12: Monopoly Causes of monopoly

Possible Barriers to Entry “a market served by a single firm” 14 Monopoly.

Taxes and welfareslide 1 Taxes and Welfare In this section, we examine the effects on welfare of changes in excise taxes. The approach taken here, is.

Application: The Costs of Taxation Chapter 8 Figure 1 The Effects of a Tax Copyright © 2004 South-Western Size of tax Quantity 0 Price Price buyers pay.

Economic Conditions Created by the Grant of a Patent $ Quantity.

12 MONOPOLY CHAPTER.

Copyright©2004 South-Western 8 Applications: The Costs of Taxation.

Application: The Costs of Taxation

© 2006 McGraw-Hill Ryerson Limited. All rights reserved.1 Chapter 11: Monopoly Prepared by: Kevin Richter, Douglas College Charlene Richter, British Columbia.

Figure 8.2 How a Competitive Firm Maximizes Profit

Applications of Supply and Demand Chapter 4 Price Controls Floor Ceilings Who benefits from each: sellers or buyers?

21 Taxes, Social Insurance, and Income Distribution  Addressing externalities  Providing public goods, maintaining common resources  Taxes, poverty,

Application: The Costs of Taxation

Which curve is the demand curve? –Curve 1 Which curve is the marginal revenue curve? –Curve 2 Why? –For a monopoly to sell more, they must decrease price,

Consumer and Producer Surplus: Effects of Taxation

Chapter Five: Welfare Analysis. Consumer Surplus.

THE COSTS OF TAXATION MR. BARNETT UNIVERSITY HIGH AP MICROECONOMICS.

Consumer, Producer and Community Surplus How much would you be willing to pay for this? Or this?

Copyright © 2004 South-Western Monopoly vs. Competition While a competitive firm is a price taker, a monopoly firm is a price maker. A firm is considered.

Price Discrimination Price discrimination is the practice of selling different units of a good or service for different prices. To be able to price discriminate,

ECONOMICS 211 Chapter 7 – Clicker Question Set #3.

Chapter 8 notes.

Are Monopolies Desirable?

MONOPOLISTIC COMPETITION The monopolistically competitive firm in the short run, The long-run equilibrium, Monopolistic VS Perfect Competition, Monopolistic.

06 Network Effects 3 Aaron Schiff ECON Reading: Cabral, Ch 17.

Monopoly CHAPTER 12. After studying this chapter you will be able to Explain how monopoly arises and distinguish between single-price monopoly and price-discriminating.

Trade and welfareslide 1 S D Q P Q* P* = $1 The diagram below shows the U.S. domestic market for water. No trade is taking place. WATER MARKET.

MACROECONOMICS Application: The Costs of Taxation CHAPTER EIGHT 1.

Copyright © 2006 Thomson Learning 15 Monopoly. Figure 1 Economies of Scale as a Cause of Monopoly Copyright © 2004 South-Western Quantity of Output Average.

Economics 2010 Lecture 13” Monopoly versus competition.

Taxes, trade, & welfareslide 1 Taxes and Welfare In this section, we examine the effects on welfare of changes in excise taxes. The approach taken here,

Worst-Case Bounds on R&D and Pricing Distortions: Theory and Disturbing Conclusions if Consumer Values Follow the World Income Distribution Comments by:

11-1 Economics: Theory Through Applications This work is licensed under the Creative Commons Attribution-Noncommercial-Share Alike 3.0 Unported.

Monopoly & Efficiency Deadweight Loss Analysis. Allocative Efficiency Total Welfare is maximized only when MC = MB for society –Since MB = Price => only.

Monopoly: Price Searcher Monopoly defined –One firm –Unique product, no close substitutes –Barriers to entry.

Deadweight Loss Retained CS Tax Rev From CS Tax Rev From CS Retained PS.

And Unit 3 – Theory of the Firm. 1. single seller in the market. 2. a price searcher -- ability to set price 3. significant barriers to entry 4. possibility.

Monopolistic Competition is is a type of economy which has many sellers and sells similar item. Monopolistic Competition is is a type of economy which.

Copyright © 2006 Thomson Learning 8 Application: The Costs of Taxation.

Lecture 6: Monopoly Advanced Micro Theory MSc.EnviNatResEcon. 1/2006 Charit Tingsabadh.

Price Discrimination 1. Defined: Sellers engage in price discrimination when they charge different prices to different consumers for the same good, because.

Economic Analysis for Business Session X: Consumer Surplus, Producer Surplus and Market Efficiency-2 Instructor Sandeep Basnyat

Current situation: bad pharma or bad patents? Inefficiencies through the patent protection process Return to patent protection rewards pharma profits –

Market Structures Mods 61-63: Monopolies. Market Structure: Monopoly Intro to Monopolies Monopoly is exact opposite of perfect competition Monopoly –

KRUGMAN'S MICROECONOMICS for AP* Introduction to Monopolistic Competition Margaret Ray and David Anderson Micro: Econ: Module.

Active ownership relations in oligopoly

Markets with Market Power

Industrial Organization

Markets with Market Power

Application: The Costs of Taxation

Monopoly (Part 2) Chapter 21.

Application: The Costs of Taxation

Applications of Welfare

The Welfare Effects of Import Tariff and Quota: “Small” Country

EQUATION Marginal Revenue and the Price Elasticity of Demand

16 Monopoly CLICKER QUESTIONS Notes and teaching tips: 3, 4, 5, 6, 7, 13, 16, 17, 19, 20,

Application: The Costs of Taxation

Are Monopolies Desirable?

AN IMPORT QUOTA IS IMPOSED

Presentation transcript:

Worst-Case Bounds on R&D and Pricing Distortions: Theory and Disturbing Conclusions if Consumer Values Follow the World Income Distribution Michael Kremer Harvard University Christopher Snyder Dartmouth College

Introduction

Basic Ideas 1 1 1/2 Figure 1: Numerical example

Basic Ideas 1 1 1/2 Figure 2: STRZ demand curve

Vaccines versus Drugs Spin off paper from Kremer & Snyder (2015) Zipf distribution of disease risk limits ability to extract rent with vaccine Risk resolves when drug sold, leading to possible bias against vaccines Ideal laboratory for general ideas here, plus calibrations and empirical tests Equal revenue (STRZ) demand Maleug & Snyder (2006) bounding profitability of price discrimination Hartline & Roughgarden (2009) compare worst case from auction mechanisms Brooks (2013) optimality of proposed auction mechanism Bergemann, Brooks & Morris (2014) general welfare results for price discrimination Rent extraction and efficiency Makowski & Ostroy (1995, 2001) Shape of demand curves Anderson & Renault (2003); Johnson & Myatt (2006); Garber, Jones & Romer (2006); Weyl & Fabinger (2013); Fabinger & Weyl (2015) Innovation incentives Dosi (1988); Freeman (1994); Acemolu & Linn (2004); Weyl & Tirole (2012); Budish, Roin, & Williams (2013) Literature

Model

Bounding Deadweight Loss

General Oligopoly Models

STRZ Demand

Decomposition

Static Inefficiency

Specific Distributions Discrete

Specific Distributions Beta

Specific Distributions Means, medians, modes

Specific Distributions General demand curvature

World Income Calibration Figure 12: World income distribution from Pinkovsky and Sala-i-Martin (2009) Figure 13: Calibrated producer surplus using 2006 data