xBookUtils.terms['fn_11_501'] = "Industry reports estimate The Lego Movie cost $60 million to make, whereas Frozen cost $150 million. We’ll assume both movies’ costs are around the average of these two values to keep the example simple.";
xBookUtils.terms['fn_11_502'] = "Sometimes the term “cartel” is reserved for joint monopoly behavior when the firms involved have a public agreement, while “collusion” is used to refer to this behavior when it is done in secret. Both describe the same economic behavior, however.";
xBookUtils.terms['fn_11_503'] = "While figuring out the market equilibrium price, total quantity, and total profits in a cartel is easy, it’s not always easy (either for economists studying cartels or the firms in the cartels themselves) to determine how the cartel’s quantity and profits will be divided among its members. We discuss this problem later in the section.";
xBookUtils.terms['fn_11_504'] = "See http://www.eia.gov/countries/index.cfm?view=production for details.";
xBookUtils.terms['fn_11_505'] = "OPEC’s actual production data are from the U.S. Energy Information Administration’s International Petroleum Monthly. Quota data are taken from the OPEC Statistical Bulletin. Both series have been adjusted to remove Iraq (which OPEC exempted from quotas during the period) and Indonesia (which suspended its membership in 2008). The figures include the effects of Ecuador and Angola’s entry into OPEC in 2008.";
xBookUtils.terms['fn_11_506'] = "Much of the material for this feature was taken from Kevin Corcoran, “The Big Fix,” The Indianapolis Star, May 6, 2007, pp. A1, A22–A23.";
xBookUtils.terms['fn_11_507'] = "This again assumes all firms in the market have the same marginal cost. If firms have different marginal costs in an identical-product Bertrand oligopoly, then the equilibrium is for the lowest-cost firm (or firms, if there are more than one with the same, lowest-in-market costs) to charge a price just under the second-lowest cost in the market. At any price higher than that, the lowest-cost firm(s) will have to split the demand with other firms without holding any pricing advantage (the other firms can now undercut). But there’s no reason to charge any less than that amount, either. It would only reduce profit without resulting in any additional sales. Therefore in equilibrium, the lowest-cost firm(s) sell(s) at a price just below the second-lowest cost level, split demand (if more than one firm has this lowest cost), and earn(s) positive profit because it (they, if more than one) earn(s) a profit margin on every sale.";
xBookUtils.terms['fn_11_508'] = "The inverse demand curve for Saudi Arabia is plotted in a diagram with quantity, qS , on the horizontal axis and price on the vertical axis. The slope is &Δ P/&Δ qS = 3. This means that only the coefficient on qS is used to determine the slope of the marginal revenue curve. The slope of the marginal revenue curve is &Δ MR/&Δ qS = 6.";
xBookUtils.terms['fn_11_509'] = "David M. Kreps and José A. Scheinkman, “Quantity Precommitment and Bertrand Competition Yield Cournot Outcomes,” Bell Journal of Economics 14, no. 2, (1983): 326–337.";
xBookUtils.terms['fn_11_510'] = "We assume zero marginal cost in this example because the concept of marginal cost is a little different when firms choose prices rather than quantities. Remember that marginal cost is the change in total cost driven by changing output by 1 unit: MC = ΔTC/Δq. As in all other market structures, a firm in a differentiated-product Bertrand oligopoly maximizes profit by setting its marginal revenue equal to its marginal cost. But the expression for marginal revenue in a Bertrand setup is the change in revenue resulting from small price changes, or MR = ΔTR/ΔP, rather than from small quantity changes, or MR = ΔTR/Δq. Therefore, the profit-maximizing price in a differentiated-product Bertrand oligopoly sets this price-based marginal revenue equal to a price-based marginal cost: ΔTR/ΔP = ΔTC/ΔP. We could go through some extra algebra to tie the two together—there is an equilibrium with nonzero marginal costs in the example—but it’s easier for our purposes here to just assume marginal costs are zero.";
xBookUtils.terms['fn_11_511'] = "Glenn Ellison and Sara Fisher Ellison, “Search, Obfuscation, and Price Elasticities on the Internet,” Econometrica 77, no. 2 (2009): 427–452.";