This preview shows pages 1–2. Sign up to view the full content.
This preview has intentionally blurred sections. Sign up to view the full version.View Full Document
Unformatted text preview: social welfare Comp. Monopoly Now future years 25 Antitrust laws: Monopoly gained through innovation is not illegal. Monopoly is reward for innovation. Possibility of monopoly is incentive for R&D. 26 Even monopolist will invest too little in R&D. 27 Monopolist’s profit from a new product: $ Q P M Q M MR D MC 28 Social surplus from a new product: $ Q P M Q MR D MC 31 Example: Monopolist profits $75 million Consumer surplus $25 million Social surplus $100 million R&D costs $90 million It is socially desirable to make this investment. But monopolist will not make the investment....
View Full Document