BIE-S

Industrial Policy: -> DEF: Industrial policy is any policy that affects a subset of firms, firms’ activities and industries differentially from the remaining firstly defined. Any tax, subsidy, trade and other policy measure that affects only a limited and specific domain of a nation’s production system can be considered as an industrial policy intervention. “Industrial […]

Concentration: -> DEF: way to measure the degree of concentration (of market power) within markets -> DEPENDS ON: size & number of the firms belonging to the focal industry. ->  IN A NUTSHELL: ❓Is concentration leading to market power or viceversa? -> Is BIDIRETIONAL,  More M.P. there is more can lead to increase concentration and

-> DEF: improvement & generartion over time of new products & production techniques. INVENTION: (technological) materialization of an intuition which can be engendered by scientific knowledge. Might be exogenous and largely random in nature and can not be influenced by market signals. Can be a process of inspiration, perspiration, both of them, and also a

Theories of the firm: Contractual & Holistic Approach -> Firms are blackbox => we need to explain some detail Neoclassical: -> DEF: Firms looks like rational agents -> but people in firms could have contrary objs. -> Firms consist of different kinds of agents 1. The contractual approach 2. The holistic approach (including the neoclassical

-> Market Structure is the more determinant thing that define the performance of a firm. -> Number of firms in an industry: -> Ex: airlines in US, Smartphones industry Tools: -> PROFIT MAXIMIZATOIN RULE: neoclassical profit maximizatoin logic. -> GAME THEORETICAL INSIGHTS: strategic interdependence. Game Theory: -> DEF: formal modeling of optimal decision-making in contexts

Strategic Interdipendence & Game Theory Basics: -> Market Structure is the more determinant thing that define the performance of a firm. -> Number of firms in an industry: -> Ex: airlines in US, Smartphones industry Tools: -> PROFIT MAXIMIZATOIN RULE: neoclassical profit maximizatoin logic. -> GAME THEORETICAL INSIGHTS: strategic interdependence. Game Theory: -> DEF: formal

Edgeworth box example -> Given: -> If there is not an authority defining if in the house we can smoke the agents will fight. The Market Signal for Merging: -> Steel mill & Fishery: price takers. SCENARIO A: separate Steel mill: max π (S, x) = psS – Cs (S, x) Suppose  Cs (S, x)

Externalities -> DEF: action made by an agent in order to maximize the object function, either utility or cost function, that has a reflection ot the cost or revenue functoin of another individual. -> DEF 2: or spillover, is a cost (benefit) imposed upon someone by actions take by others (with no compensation) -> TYPE:

-> Time: made of several period => Maximum profit levels: ; A.Perfect Competition: -> DEF: no market power for firms. -> PERFECT COMPETITIVE MARKET: market where firms are price-taker -> HP: + technology simmetry: the tecnologies are the same -> Firms are… …PRICE-TAKER: …DON’T VE EXTRA-PROFITS: -> In economics we consider the  opportunity costs in