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Principles of Economics- Mankiw (5th) 324

Principles of Economics- Mankiw (5th) 324 - 334 PA R T F I...

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334 PART FIVE FIRM BEHAVIOR AND THE ORGANIZATION OF INDUSTRY DOING NOTHING Each of the foregoing policies aimed at reducing the problem of monopoly has drawbacks. As a result, some economists argue that it is often best for the govern- ment not to try to remedy the inefficiencies of monopoly pricing. Here is the as- sessment of economist George Stigler, who won the Nobel Prize for his work in industrial organization, writing in the Fortune Encyclopedia of Economics: A famous theorem in economics states that a competitive enterprise economy will produce the largest possible income from a given stock of resources. No real economy meets the exact conditions of the theorem, and all real economies will I N MANY CITIES , THE MASS TRANSIT SYSTEM of buses and subways is a monopoly run by the local government. But is this the best system? Man with a Van B Y J OHN T IERNEY Vincent Cummins looks out from his van with the wary eyes of a hardened crimi- nal. It is quiet this evening in downtown
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