Managing in Competitive, Monopolistic and

Monopolistically Competitive Market

Nugraha SetyawidaputraPutri Amandhari

6th May 2014PRA MBA C 64

HEADLINE: Starbucks Enters Tea-Loving India

Persaingan Sempurna

Managing in Competitive, Monopolistic and Monopolistically Competitive Market

PERSAINGAN SEMPURNABanyak pembeli dan penjualBarang yang dijual serupaPembeli dan penjual memiliki Informasi

yang lengkap Tidak ada biaya transaksiBebas keluar masuk

8-4

Unrealistic? Why Learn?Many small businesses are “price-takers,” and

decision rules for such firms are similar to those of perfectly competitive firms.

It is a useful benchmark.Explains why governments oppose monopolies.Illuminates the “danger” to managers of

competitive environments. Importance of product differentiation.Sustainable advantage.

8-5

Kurva Permintaan

FirmQf

$

Df

MarketQM

$

D

S

Pe

Profit-MaximizingMR = MC.karena, MR = P, P = MC untuk memaksimalkan profit

8-7

$

Qf

ATCMC

Pe = Df = MR

Qf*

ATC

Pe

Max Profit P = MC

profit

loss

$

Q

ATC

AVC

Q*

Pe

Short run-operating lossMC

ATC(Q*

)

Shut down decision

$

Q

ATC

AVCMC

Pe = Df = MR

Q*

ATC

Pe

Loss if shut down

AVC

Loss if produce

Shutdown Decision Rule

Decision rule:Sebuah perusahaan pada pasar persaingan

sempurna harus menutup usahanya saat P < min AVC.

Sebuah perusahaan pada pasar persaingan sempurna dapat melanjutkan usahanya P ≥ min AVC.

8-11

$

Qf

AVC

MC

Q0

P0

Short-Run Supply Curve: MC Diatas Min AVC

P1

Q1

Market Supply Curve

Individual firm

10

1 Q

P

12

500

8-13

Market

Effect of Entry and Exit

FirmQf

$

D

MarketQM

$

D

S

Pe

S1

P1 D1

Entry

Exit

S2

D2P2

MONOPOLISTIC

COMPETITION

Managing in Competitive, Monopolistic and Monopolistically Competitive Market

Banyak penjual dan pembeliSetiap perusahaan memproduksi barang yang berbeda

Bebas keluar masuk pasar

CONDITION FOR MONOPOLISTIC COMPETITION

PROFIT MAXIMIZATION• Kurva permintaan pasar persaingan monopolistik lebih

elastis dari pasar monopoli

• Kondisi ini, dengan asumsi free entry dan free exit akan mendorong masuknya kompetitor baru

Perusahaan akan memaksimumkan profit saat

MR (Q*) = MC (Q*)Charge the price on the demand curve that corresponds to that quantity.

Profit Maximization under Monopolistic Competition

$ATC

MC

D

MRQM

PM

Profit

ATC

Quantity of Brand X

8-17

• Konsekuensi kompetitor baru adalah turunnya permintaan terhadap perusahaan incumbent

• • Jika hal ini terus berlangsung, profit perusahaan incumbent akan tergerus sampai profit ekonominya=0

Pilihan bagi perusahaan incumbent: • efisiensi biaya atau meningkatkan permintaan dengan

melakukan inovasi, keluar atau masuk industrimemperbesar atau mengurangi skala perusahaannya

$

ATC

MC

D

MRQ*

P*

Quantity of Brand XMR1

D1

Entry

Due to entry of new firms selling other brands

Effect of Entry on a Monopolistically Competitive Firm’s Demand

8-18

LONG-RUN EQUILIBRIUM

P > MCP = ATC > minimum of average cost

Long-Run Equilibrium •Long-run equilibrium terjadi pada sebuah pasar kompetitif saat: •Economic profit adalah nol, jadi perusahan tidak keluar dan juga tidak masuk industri. •Long-run average cost berada pada nilai minimum, jadi perusahaan tidak lagi mengubah ukuran perusahaan.

$ACMC

D

MR

Q*

P*

Quantity of Brand X

Long Run Monopolistically Competitive Equilibrium

Long-Run Monopolistic Competition8-19

Summary of Logic

• Short run profits leads to entry.• Entry increases market supply, drives down

the market price, increases the market quantity.

• Demand for individual firm’s product shifts down.

• Firm reduces output to maximize profit.• Long run profits are zero.

Comparative Advertising

Brand Equity

Niche MarketingBrand Myopic Manager

IMPL

ICAT

ION

IMPL

ICAT

ION

OF PR

ODUCT

DIF

FERE

NTIA

TION

OF PR

ODUCT

DIF

FERE

NTIA

TION

OPTIMAL ADVERTISING DECISION

Incremental Cost of Advertising Incremental Revenue

Formula

•A = firm expenditures on advertising•R = PQ denotes the dollar value of the firm sales•EQP = own price elasticity of demand for firm product (extreme case dia –infinite)

•EQA advertising elasticity of demand for the firm product

ANSWERING THE HEADLINE