Market Experiments
-a case of imperfect competitionWritten by
Khodori Eko
Purwanto
3008 011 22
1
What…
Characteristics of imperfect competition
-Producer with market powerSmall number of producers are competing in the market with big
market share and power to control demand and supply.
-Non standard productsThe products do not have standardization in feature or composition,
even from a producer.
-High entry barriersIt is relatively difficult to enter into the market.
-Low informationProducers and consumers can not obtain sufficient information
about the product, price, and market.
2
How…
Seller
52 65 65 71 76 100 90
70 62 70 70 80 83 95
Buyer
90 70 80 65 79.99 50 65
95 75 81 65 78 73 60
Reported
Data
Survey
Regulated
price
Analysis
3
How…
No Seller
1 52,000
2 62,000
3 65,000
4 65,000
5 70,000
6 70,000
7 70,000
8 71,000
9 76,000
10 80,000
11 83,000
12 90,000
13 95,000
14 100,000
Buyer
95,000
90,000
81,000
80,000
79,999
78,000
75,000
73,000
70,000
65,000
65,000
65,000
60,000
50,000
120,000
yy == 3092.3x
3092.3x ++ 51736
51736
100,000
80,000
60,000
y = -2780.2x + 94209
40,000
20,000
0
1
2
3
4
5
6
7
8
9
10
11
12
13
14
3,092.3 X + 51,736 = - 2,780.2 X + 94,209
X = 7.2325
Y = 74,101.14
4
How…
Buyer/seller
50,000
60,000
65,000
65,000
65,000
70,000
73,000
75,000
78,000
79,999
80,000
81,000
90,000
95,000
52,000
0
4,000
6,500
6,500
6,500
9,000
10,500
11,500
13,000
14,000
14,000
14,500
19,000
21,500
62,000
0
0
1,500
1,500
1,500
4,000
5,500
6,500
8,000
9,000
9,000
9,500
14,000
16,500
65,000
0
0
0
0
0
2,500
4,000
5,000
6,500
7,500
7,500
8,000
12,500
15,000
65,000
0
0
0
0
0
2,500
4,000
5,000
6,500
7,500
7,500
8,000
12,500
15,000
70,000
0
0
0
0
0
0
1,500
2,500
4,000
5,000
5,000
5,500
10,000
12,500
Average price of seller = 74,929
70,000
0
0
0
0
0
0
1,500
2,500
4,000
5,000
5,000
5,500
10,000
12,500
70,000
0
0
0
0
0
0
1,500
2,500
4,000
5,000
5,000
5,500
10,000
12,500
71,000
0
0
0
0
0
0
1,000
2,000
3,500
4,500
4,500
5,000
9,500
12,000
76,000
0
0
0
0
0
0
0
0
1,000
2,000
2,000
2,500
7,000
9,500
80,000
0
0
0
0
0
0
0
0
0
0
0
500
5,000
7,500
83,000
0
0
0
0
0
0
0
0
0
0
0
0
3,500
6,000
90,000
0
0
0
0
0
0
0
0
0
0
0
0
0
2,500
95,000
0
0
0
0
0
0
0
0
0
0
0
0
0
0
100,000
0
0
0
0
0
0
0
0
0
0
0
0
0
0
Average price of buyer = 73,357
Price range : ¥ 71,000 - ¥ 74,000
Number of deal : 8 deals
5
Conclusion…
-Government in imperfect competition-
Interest: increase the taxable income from seller and buyer.
Require to push the profitable deal happened by market intervention.
Based on the survey and analysis from Statistics Bureau:
What the government should do?
-Imposing the highest retail price for producersIn this case, the producers must sell their products below the highest
price of ¥ 74,000.
Producers can not sell the products more than ¥ 74,000.
The government do not have to regulate the buyers’ price. It will be
adjusted by itself due to the imposing of highest retail price.
6
ARIGATOU
7