Universitas Trilogi

“ PARADIGMA SCP”
#MK-EkonomiIndustri April 2020

#DiRumahAja
 S-C-P Paradigm
One-way Relation (Sebab Akibat):

Structure Conduct Performance

Struktur mengakibatkan Perilaku, dan Perilaku mengakibatkan Kinerja
(Harvard Paradigm)

Two-way Relations:

Structure Conduct Performance

Saling mempengaruhi: Struktur mengakibatkan Perilaku dan sebaliknya,
Perilaku mengakibatkan Kinerja dan Kinerja mengakibatkan Struktur
(Chicago Paradigm)
 Lebih Lengkap: S-C-P Paradigm

Basic Condition - SUPPLY Basic Condition - DEMAND

 Raw Material  Substitutes
 Costs  Rate of growth
 Technology  Price elasticity
 Unionization
 Cyclical and seasonal
 Product durability
character
 Value/weight
 Purchase method
 Business attitudes
 Marketing type
 Legal framework
 Distribution type

Structure :
 Concentration (Number of sellers and buyers)
 Product differentiation
 Barriers to entry
 Cost structures
 Vertical integration Public Policy :
 Diversification • Regulation ,Kebijakan Industri
• Taxes and subsides
• International trade rules
Conduct : • Price controls (Subsidies)
 Pricing behavior • Antitrust
 Product strategy and advertising • Information provision
 Research and innovation
 Plant investment
 Legal tactics

Performance
Performance :
 Public Objectives (Pancasila)
 Full employment
 Profitabilty
 Production and allocative efficiency

1
 Market Structure

Number of sellers and

buyers
Product differentiation
Barriers to entry
Cost structures
Vertical integration
Diversification

7
The Market Structures
 Market Conduct

Pricing behavior
Product strategy and
advertising
Research and
innovation
Plant investment
Legal tactics

8
 Performance
Public Objectives
(Pancasila-Welfare)
Production and
allocative efficiency
Profitability

9
Public (Industrial) Policy

Taxes and subsidies

International trade rules
Regulation
Price controls
Antitrust (Fair Competition)
Information provision

10
 EXISTENCE OF NATURAL MONOPOLY
P Market D
AC AC for firm Examples :
Don’t regulate : Motor Carriers
achieve first best Water Carriers

Y No
MOS small relative to Mkt Mkt D
P AC for firm
Is there a “natural monopoly “ ? (Is MOS AC
large relative to D, so that competition
WITHIN the market is not possible ? ) Y
MOS large relative to Mkt
Yes
P AC D
P D AC
Is Deadweight Loss at “Small” DWL
MC
AC “Second Best”
AC (relative to “First Best”)
MC “Tolerable” ?
“Large” DWL
MC Y
Y No Yes

Can there be competition FOR the market ? ---

(a). Demsetz Competition
Regulate to achieve (b). Contestable Market
“First Best” (or near (c). Monopolostic Competition (Intermodal Competition)
“First Best”) outcome
No Yes
1. Need external subsidy
2. Price Discrimination
3. Nonlinier (Multipart Regulate to achieve “Second Best” Introduction Competition
Tariffs) (or near “Second Best”) outcome FOR the Market
(to allow firm to avoid a
deficit and price efficiency)
(may avoid external subsidy and
nonlinear tariffs)
2
 Antitrust Economics
FIGURE 1 : FIGURE 2 : FIGURE 3 :
PROFIT MAXIMIZATION BY A FIRM OUTPUT OF A COMPETITIVE FIRM OUTPUT OF OMPETITIVE INDUSTRY
P P MC (Marginal
MC (Marginal Cost)
P MCS, S
p (Marginal
Cost) Cost Summed,
Supply)
E
P P D; MR P
(Demand;
Marginal
Revenue)
TR TR MR
(Marginal D
Revenue) Q
o q Q 5,000
5,000 Q

FIGURE 4 :
PRICING BY A MONOPOLISTIC FIGURE 5 : PROFIT-MAXIMIZING MONOPOLIST FIGURE 6 :
(INCREASING MARGINAL COST) MONOPOLIZING A COMPETITIVE INDUSTRY
$ 1.00 P MC (Monopoly)
P -S (Competition)
MC

60 PX Pm
B Welfare
Pc loss
Income
10 D A Transfer
MC
D D
5 10 qx qm qm qc
Q Q
MR MR MR