MICRO V MACRO

• Micro effects


  Simple, direct effects on individual markets and agents
• Macro effects


  Broader, indirect effects on the overall economy
• Market structures


  • Monopoly
  • Oligopoly
  • Competitive markets
• Micro effects of market structures


  • Static efficiency (allocative, productive, X-efficiency)
  • Anti-competitive strategies (mergers, predatory pricing, limit pricing, advertising)
  • Price discrimination
• Macro effects of market structures

  • Dynamic efficiency gains
  • Impact on long-run growth and productivity
  • Job creation/unemployment
  • Productive efficiency and economies of scale
  • Affordability and consumer surplus, impact on living standards and income inequality
• Trade unions


  • Impact on labour market (wages, unemployment)
  • Improving worker rights and protections
  • Dealing with monopsony power
  • Cost burden on firms
• Macro effects of trade unions

  • Potential to raise unemployment in traditional labour markets
  • Reduce unemployment in monopsony labour markets
  • Impose costs on firms that could drive up prices and inflation
  • Worsen international competitiveness
  • Deter FDI
• Subsidies


  • Reduce price by lowering production costs
  • Increase consumer surplus and quantity
  • Improve affordability of essential goods
  • Impact on producer revenue and firm efficiency
• Macro effects of subsidies

  • Protectionist measure to support domestic industry
  • Reduce cost-push inflation by lowering production costs
  • Improve international competitiveness
  • Attract FDI
  • Impact on government finances (budget deficit, national debt)
• Privatisation and deregulation


  • Promote static and dynamic efficiency
  • Lower prices and higher consumer surplus
  • Higher quality and choice for consumers
  • Negative impacts on worker welfare (cost-cutting, job losses)
  • Potential to worsen market failures
• Macro effects of privatisation and deregulation

  • Boost long-run growth and productivity
  • Impact on employment and unemployment
  • Improve infrastructure and competitiveness to attract FDI
  • Increase government revenue to reduce budget deficits