北大微观经济学课件ch16Equilibrium.ppt

Chapter Sixteen,Equilibrium均衡,Structure,Market equilibriumQuantity tax and equilibriumTax incidence（税收分担）Deadweight loss（额外净损失）,Market Equilibrium,A market is in equilibrium when total quantity demanded by buyers equals total quantity supplied by sellers.Also called“market is cleared”Supply may not equal production,Market Equilibrium,p,D(p),S(p),q=D(p),Marketdemand,Marketsupply,q=S(p),Market Setting,Competitive marketContestable market,Market Equilibrium,p,D(p),S(p),q=D(p),Marketdemand,Marketsupply,q=S(p),p*,q*,D(p*)=S(p*);the marketis in equilibrium.,Market Equilibrium,p,D(p),S(p),q=D(p),Marketdemand,Marketsupply,q=S(p),p*,S(p),D(p)S(p);an excessof quantity supplied overquantity demanded.,p,D(p),Market Equilibrium,p,D(p),S(p),q=D(p),Marketdemand,Marketsupply,q=S(p),p*,S(p),D(p)S(p);an excessof quantity supplied overquantity demanded.,p,D(p),Market price must fall towards p*.,Market Equilibrium,p,D(p),S(p),q=D(p),Marketdemand,Marketsupply,q=S(p),p*,D(p”),D(p”)S(p”);an excessof quantity demandedover quantity supplied.,p”,S(p”),Market Equilibrium,p,D(p),S(p),q=D(p),Marketdemand,Marketsupply,q=S(p),p*,D(p”),D(p”)S(p”);an excessof quantity demandedover quantity supplied.,p”,S(p”),Market price must rise towards p*.,Market Equilibrium Linear D&S,At the equilibrium price p*,D(p*)=S(p*).That is,which gives,and,Market Equilibrium,p,D(p),S(p),D(p)=a-bp,Marketdemand,Marketsupply,S(p)=c+dp,Market Equilibrium,Can we calculate the market equilibrium using the inverse market demand and supply curves?Yes,it is the same calculation.,Market Equilibrium,the equation of the inverse marketdemand curve.And,the equation of the inverse marketsupply curve.,Market Equilibrium,q,D-1(q),S-1(q),D-1(q)=(a-q)/b,Market inversedemand,S-1(q)=(-c+q)/d,p*,q*,At equilibrium,D-1(q*)=S-1(q*).,Market inverse supply,Market Equilibrium,and,At the equilibrium quantity q*,D-1(p*)=S-1(p*).That is,which gives,and,Market Equilibrium,q,D-1(q),S-1(q),D-1(q)=(a-q)/b,Marketdemand,Marketsupply,S-1(q)=(-c+q)/d,Market Equilibrium,Two special cases:quantity supplied is fixed,independent of the market price,andquantity supplied is extremely sensitive to the market price.,Market Equilibrium,S(p)=c+dp,so d=0and S(p)c.,p,q,q*=c,Market quantity supplied isfixed,independent of price.,Market Equilibrium,S(p)=c+dp,so d=0and S(p)c.,p,q,p*,D-1(q)=(a-q)/b,Marketdemand,q*=c,Market quantity supplied isfixed,independent of price.,Market Equilibrium,S(p)=c+dp,so d=0and S(p)c.,p,q,p*=(a-c)/b,D-1(q)=(a-q)/b,Marketdemand,q*=c,p*=D-1(q*);that is,p*=(a-c)/b.,Market quantity supplied isfixed,independent of price.,Market Equilibrium,S(p)=c+dp,so d=0and S(p)c.,p,q,D-1(q)=(a-q)/b,Marketdemand,q*=c,p*=D-1(q*);that is,p*=(a-c)/b.,with d=0 give,p*=(a-c)/b,Market quantity supplied isfixed,independent of price.,Market Equilibrium,Market quantity supplied isextremely sensitive to price.,S-1(q)=p*.,p,q,p*,Market Equilibrium,Market quantity supplied isextremely sensitive to price.,S-1(q)=p*.,p,q,p*,D-1(q)=(a-q)/b,Marketdemand,q*,Market Equilibrium,Market quantity supplied isextremely sensitive to price.,S-1(q)=p*.,p,q,p*,D-1(q)=(a-q)/b,Marketdemand,q*=a-bp*,p*=D-1(q*)=(a-q*)/b soq*=a-bp*,Comparative Statics,Shifting demand curvesIncomePrice of other productsShifting supply curvesTechnologyTaxes,Quantity Taxes,A quantity tax levied at a rate of$t is a tax of$t paid on each unit traded.If the tax is levied on sellers then it is an excise tax.If the tax is levied on buyers then it is a sales tax.,Quantity Taxes,What is the effect of a quantity tax on a markets equilibrium?How are prices affected?How is the quantity traded affected?Who pays the tax?How are gains-to-trade altered?,Quantity Taxes,A tax rate t makes the price paid by buyers,pb,higher by t from the price received by sellers,ps.,Quantity Taxes,Even with a tax the market must clear.I.e.quantity demanded by buyers at price pb must equal quantity supplied by sellers at price ps.,Quantity Taxes,and,describe the markets equilibrium.Notice that these two conditions apply nomatter if the tax is levied on sellers or onbuyers.,Hence,a sales tax rate$t has thesame effect as an excise tax rate$t.,Quantity Taxes&Market Equilibrium,p,D(p),S(p),Marketdemand,Marketsupply,p*,q*,No tax,Quantity Taxes&Market Equilibrium,p,D(p),S(p),Marketdemand,Marketsupply,p*,q*,$t,An excise taxraises the marketsupply curve by$t,Quantity Taxes&Market Equilibrium,p,D(p),S(p),Marketdemand,Marketsupply,p*,q*,An excise taxraises the marketsupply curve by$t,raises the buyersprice and lowers thequantity traded.,$t,pb,qt,Quantity Taxes&Market Equilibrium,p,D(p),S(p),Marketdemand,Marketsupply,p*,q*,An excise taxraises the marketsupply curve by$t,raises the buyersprice and lowers thequantity traded.,$t,pb,qt,And sellers receive only ps=pb-t.,ps,Quantity Taxes&Market Equilibrium,p,D(p),S(p),Marketdemand,Marketsupply,p*,q*,No tax,Quantity Taxes&Market Equilibrium,p,D(p),S(p),Marketdemand,Marketsupply,p*,q*,An sales tax lowersthe market demandcurve by$t,$t,Quantity Taxes&Market Equilibrium,p,D(p),S(p),Marketdemand,Marketsupply,p*,q*,An sales tax lowersthe market demandcurve by$t,lowersthe sellers price andreduces the quantitytraded.,$t,qt,ps,Quantity Taxes&Market Equilibrium,p,D(p),S(p),Marketdemand,Marketsupply,p*,q*,An sales tax lowersthe market demandcurve by$t,lowersthe sellers price andreduces the quantitytraded.,$t,pb,pb,qt,pb,And buyers pay pb=ps+t.,ps,Quantity Taxes&Market Equilibrium,p,D(p),S(p),Marketdemand,Marketsupply,p*,q*,A sales tax levied atrate$t has the sameeffects on themarkets equilibriumas does an excise taxlevied at rate$t.,$t,pb,pb,qt,pb,ps,$t,Quantity Taxes&Market Equilibrium,Who pays the tax of$t per unit traded?The division of the$t between buyers and sellers is the incidence of the tax(税收分担).,Quantity Taxes&Market Equilibrium,p,D(p),S(p),Marketdemand,Marketsupply,p*,q*,pb,pb,qt,pb,ps,Quantity Taxes&Market Equilibrium,p,D(p),S(p),Marketdemand,Marketsupply,p*,q*,pb,pb,qt,pb,ps,Tax paid by buyers,Quantity Taxes&Market Equilibrium,p,D(p),S(p),Marketdemand,Marketsupply,p*,q*,pb,pb,qt,pb,ps,Tax paid by sellers,Quantity Taxes&Market Equilibrium,p,D(p),S(p),Marketdemand,Marketsupply,p*,q*,pb,pb,qt,pb,ps,Tax paid by buyers,Tax paid by sellers,Quantity Taxes&Market Equilibrium,E.g.suppose the market demand and supply curves are linear.,Quantity Taxes&Market Equilibrium,and,Quantity Taxes&Market Equilibrium,and,With the tax,the market equilibrium satisfies,and,so,and,Quantity Taxes&Market Equilibrium,and,With the tax,the market equilibrium satisfies,and,so,and,Substituting for pb gives,Quantity Taxes&Market Equilibrium,and,give,The quantity traded at equilibrium is,Quantity Taxes&Market Equilibrium,As t 0,ps and pb,theequilibrium price ifthere is no tax(t=0)and qt the quantity traded at equilibriumwhen there is no tax.,Quantity Taxes&Market Equilibrium,As t increases,ps falls,pb rises,andqt falls.,Quantity Taxes&Market Equilibrium,The tax paid per unit by the buyer is,Quantity Taxes&Market Equilibrium,The tax paid per unit by the buyer is,The tax paid per unit by the seller is,Quantity Taxes&Market Equilibrium,The total tax paid(by buyers and sellerscombined)is,Tax Incidence and Own-Price Elasticities,The incidence of a quantity tax depends upon the own-price elasticities of demand and supply.,Tax Incidence and Own-Price Elasticities,p,D(p),S(p),Marketdemand,Marketsupply,p*,q*,$t,pb,qt,ps,Tax Incidence and Own-Price Elasticities,p,D(p),S(p),Marketdemand,Marketsupply,p*,q*,$t,pb,qt,ps,Change to buyersprice is pb-p*.Change to quantitydemanded is Dq.,Dq,Tax Incidence and Own-Price Elasticities,Around p=p*the own-price elasticityof demand is approximately,Tax Incidence and Own-Price Elasticities,Around p=p*the own-price elasticityof demand is approximately,Tax Incidence and Own-Price Elasticities,p,D(p),S(p),Marketdemand,Marketsupply,p*,q*,$t,pb,qt,ps,Tax Incidence and Own-Price Elasticities,p,D(p),S(p),Marketdemand,Marketsupply,p*,q*,$t,pb,qt,ps,Change to sellersprice is ps-p*.Change to quantitydemanded is Dq.,Dq,Tax Incidence and Own-Price Elasticities,Around p=p*the own-price elasticityof supply is approximately,Tax Incidence and Own-Price Elasticities,Around p=p*the own-price elasticityof supply is approximately,Tax Incidence and Own-Price Elasticities,p,D(p),S(p),Marketdemand,Marketsupply,p*,q*,pb,pb,qt,pb,ps,Tax paid by buyers,Tax paid by sellers,Tax Incidence and Own-Price Elasticities,p,D(p),S(p),Marketdemand,Marketsupply,p*,q*,pb,pb,qt,pb,ps,Tax paid by buyers,Tax paid by sellers,Tax incidence=,Tax Incidence and Own-Price Elasticities,Tax incidence=,Tax Incidence and Own-Price Elasticities,Tax incidence=,So,Tax Incidence and Own-Price Elasticities,Tax incidence is,The fraction of a$t quantity tax paidby buyers rises as supply becomes moreown-price elastic or as demand becomesless own-price elastic.,Tax Incidence and Own-Price Elasticities,p,D(p),S(p),Marketdemand,Marketsupply,p*,q*,$t,pb,qt,ps,As market demandbecomes less own-price elastic,taxincidence shifts moreto the buyers.,Tax Incidence and Own-Price Elasticities,p,D(p),S(p),Marketdemand,Marketsupply,p*,q*,$t,pb,qt,ps,As market demandbecomes less own-price elastic,taxincidence shifts moreto the buyers.,Tax Incidence and Own-Price Elasticities,p,D(p),S(p),Marketdemand,Marketsupply,ps=p*,$t,pb,qt=q*,As market demandbecomes less own-price elastic,taxincidence shifts moreto the buyers.,Tax Incidence and Own-Price Elasticities,p,D(p),S(p),Marketdemand,Marketsupply,ps=p*,$t,pb,qt=q*,As market demandbecomes less own-price elastic,taxincidence shifts moreto the buyers.,When eD=0,buyers pay the entire tax,even though it is levied on the sellers.,Tax Incidence and Own-Price Elasticities,Tax incidence is,Similarly,the fraction of a$t quantitytax paid by sellers rises as supplybecomes less own-price elastic or asdemand becomes more own-price elastic.,Deadweight Loss and Own-Price Elasticities,A quantity tax imposed on a competitive market reduces the quantity traded and so reduces gains-to-trade(i.e.the sum of Consumers and Producers Surpluses).The lost total surplus is the taxs deadweight loss（额外净损失）,or excess burden.,Deadweight Loss and Own-Price Elasticities,p,D(p),S(p),Marketdemand,Marketsupply,p*,q*,No tax,Deadweight Loss and Own-Price Elasticities,p,D(p),S(p),Marketdemand,Marketsupply,p*,q*,No tax,CS,Deadweight Loss and Own-Price Elasticities,p,D(p),S(p),Marketdemand,Marketsupply,p*,q*,No tax,PS,Deadweight Loss and Own-Price Elasticities,p,D(p),S(p),Marketdemand,Marketsupply,p*,q*,No tax,CS,PS,Deadweight Loss and Own-Price Elasticities,$t,qt,CS,The tax reducesboth CS and PS,Deadweight Loss and Own-Price Elasticities,p,D(p),S(p),Marketdemand,Marketsupply,p*,q*,$t,pb,qt,ps,CS,PS,The tax reducesboth CS and PS,transfers surplusto government,Tax,Deadweight Loss and Own-Price Elasticities,p,D(p),S(p),Marketdemand,Marketsupply,p*,q*,$t,pb,qt,ps,CS,PS,The tax reducesboth CS and PS,transfers surplusto government,Tax,Deadweight Loss and Own-Price Elasticities,p,D(p),S(p),Marketdemand,Marketsupply,p*,q*,$t,pb,qt,ps,CS,PS,The tax reducesboth CS and PS,transfers surplusto government,Tax,Deadweight Loss and Own-Price Elasticities,p,D(p),S(p),Marketdemand,Marketsupply,p*,q*,$t,pb,qt,ps,CS,PS,The tax reducesboth CS and PS,transfers surplusto government,and lowers total surplus.,Tax,Deadweight Loss and Own-Price Elasticities,p,D(p),S(p),Marketdemand,Marketsupply,p*,q*,$t,pb,qt,ps,Deadweight loss,Deadweight Loss and Own-Price Elasticities,p,D(p),S(p),Marketdemand,Marketsupply,p*,q*,$t,pb,qt,ps,Deadweight loss fallsas market demandbecomes less own-price elastic.,Deadweight Loss and Own-Price Elasticities,p,D(p),S(p),Marketdemand,Marketsupply,ps=p*,$t,pb,qt=q*,Deadweight loss fallsas market demandbecomes less own-price elastic.,When eD=0,the tax causes no deadweight loss.,Deadweight Loss and Own-Price Elasticities,Deadweight loss due to a quantity tax rises as either market demand or market supply becomes more own-price elastic.If either eD=0 or eS=0 then the deadweight loss is zero.,Examples of Equilibrium Analysis,Price ceilingMinimum priceAgricultural price controlMinimum wage,p,D(p),S(p),p*,q*,pmax,D,A,B,C,E,F,qS,Price control,CS=C-EPS=-C-FDWL=-E-F+waiting in line,qD,p,D(p),S(p),p*,q*,pmax,D,A,B,C,E,F,qmax,Price control with rationing,CS=C-EPS=-C-FDWL=-E-F+corruption,p,D(p),S(p),p*,q*,ps,D,A,B,C,E,F,qmax,Price floor with acreage control,Payment=E+F+GCS=-B-EPS=B-F+paymentGovernment loss=paymentDWL=-E-F,G,Minimum Wage,Single sector single type of laborCovered vs.uncovered sectorSkilled vs.unskilled workers,