Monopoly regulation

Monopoly regulation - so that the firms MC curve is below...

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1 Single-Price Monopoly and Competition Compared • Monopoly produces less than a firm in perfect competition • Monopoly charges more • Consumer Surplus (monopoly)<Consumer Surplus (p.c.) • Producer Surplus (monopoly)>Producer Surplus (p.c.) • Total Surplus (monopoly)<Total Surplus (p.c.) Î D.W.L. Are monopolies ever good? Product innovation Economies of scale and scope
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2 Monopoly and Oligopoly Regulation Government intervenes in monopoly and oligopoly markets in two main ways: ± Antitrust laws ± Regulation of Natural Monopoly A natural monopoly’s ATC curve falls throughout the relevant range of production
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Unformatted text preview: so that the firms MC curve is below its ATC curve when the MC curve crosses the demand curve. 3 Monopoly and Oligopoly Regulation Price Discrimination Price discrimination: selling different units of a good or service for different prices. To be able to price discriminate, a monopoly must: Identify and separate different buyer types Sell a product that cannot be resold 4 Price Discrimination Efficiency and Rent Seeking with Price Discrimination The more perfectly a monopoly can price discriminate the more efficient is the outcome. But : The monopoly captures the entire consumer surplus!...
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Monopoly regulation - so that the firms MC curve is below...

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