Should Antitrust Agencies be Concerned about Limit Pricing?

Limit Pricing is a fascinating yet widely unexplored concept in economics classes. When teaching our students about how monopolists and/or firms with market power make their decision regarding output and prices, it usually follows a simple premise - firms choose the level of output to maximize profits, which occurs where marginal revenue equals marginal cost, … Continue reading Should Antitrust Agencies be Concerned about Limit Pricing?

DO FIRMS MAXIMIZE PROFITS?

First clarification I want to make is the understanding that this post isn’t about whether firms should or not maximize profit – which can just as well be the theme for another post. Most Micro and Macroeconomic Theory start from the premise that each firm seeks to maximize profit, which is intuitively sound and can … Continue reading DO FIRMS MAXIMIZE PROFITS?

Bounded Rationality….We are only humans…

From the assumptions in the field of Economics, one that is constantly criticized in and outside the field is rationality. Among many things of human existence, perhaps the concept of rationality is just as overrated as consistency (I won't get to my issue with consistency just yet, that's perhaps topic for another post).Rationality subdivides itself … Continue reading Bounded Rationality….We are only humans…