Discuss specific cases that lead to an increase in the concentration and market power from deregulation.
What will be an ideal response?
In the airline industry, deregulation in the 1970s initially increased entry and price competition. However, due to high fixed costs, hub dominance, and rival retaliation, the industry became more concentrated and firms have more market power. In the telecommunications industry, the high fixed costs of satellites have led to mergers and a decrease in the number of sellers in both long-distance and local telephone service.
You might also like to view...
How much is a bond that pays $80 in coupon payments for 4 years and $1,000 at the end of the fourth year worth if the interest rate is 6%?
A) $855.46 B) $1,045.56 C) $1,069.30 D) $1,140.00
Marginal revenue, graphically, is
A) the slope of a line from the origin to a point on the total revenue curve. B) the slope of a line from the origin to the end of the total revenue curve. C) the slope of the total revenue curve at a given point. D) the vertical intercept of a line tangent to the total revenue curve at a given point. E) the horizontal intercept of a line tangent to the total revenue curve at a given point.