Structure Definition When to provide a public good – Efficient provision – Private provision: free-riding Variable quantities of public good – Efficient amount – Free-riding problem How to provide public goods? Demand revelation

Structure Definition Consumption externality Production externality The tragedy of commons

Now Add Production ... Add input markets, output markets, describe firms’ technologies, the distributions of firms’ outputs and profits … That’s not easy!

Contents The Edgeworth (艾奇沃斯) Box Pareto improving trade Pareto Efficient Allocation The Core (核心) Trade in a competitive market Walras’ Law of general equilibrium (一般均衡)

Contents Dominant strategy Nash equilibrium Prisoner’s dilemma and repeated games Multiple equilibria and sequential games Pure and mixed strategies

Structure Non-collusive moves – Simultaneous moves Quantity competition –Cournot model Price competition – Bertrand model – Sequential moves Quantity leadership – Stakelberg model Price leadership Collusion

How Should a Monopoly Price? So far a monopoly has been thought of as a firm which has to sell its product at the same price to every customer. This is uniform pricing. Can price-discrimination （差别定价 ）earn a monopoly higher profits?

Structure What causes monopoly Profit-maximizing choices of monopoly Markup pricing Taxing a monopoly Inefficiency of monopoly Natural monopoly (自然垄断)

Structure Market supply Short-run supply and equilibrium Long-run supply and equilibrium Long-run implications for taxation Fixed inputs and economic rent (经济租金)

Structure Market environments Market demand for a competitive firm Short-run supply decision Upward sloping MC curve Shut-down condition Long-run supply decision Comparing long-run and short-rundecisions. Producer’s surplus and profits