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Innovation and the opportunity cost of monopoly

Reksulak, Michael ; Shughart II, William F. ; Tollison, Robert D.

Managerial and decision economics, 2008-12, Vol.29 (8), p.619-627 [Periódico revisado por pares]

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Título:
Innovation and the opportunity cost of monopoly
Autor: Reksulak, Michael ; Shughart II, William F. ; Tollison, Robert D.
Assuntos: Antitrust ; Business innovation ; Deadweight loss ; Financial market structures ; Industrial organization ; Innovations ; Marginal costs ; Monopolies ; Monopolistic competition ; Monopoly ; Opportunity cost ; Opportunity costs ; Static loads ; Studies ; Technological innovation ; Welfare ; Welfare losses
É parte de: Managerial and decision economics, 2008-12, Vol.29 (8), p.619-627
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Descrição: Innovation enables monopolists to lower their costs, expand their outputs, and reduce their prices. It is conventional to conclude that social welfare unambiguously increases as a result. Assuming linear demand and marginal cost, this paper shows, however, that innovation raises the opportunity cost of monopoly: as a firm enjoying market power becomes more efficient, greater amounts of surplus are sacrificed by consumers because of the progressive monopolist's failure to produce the new, larger competitive output. Innovation, in other words, increases the social value of competition by raising the deadweight cost of monopoly.
Editor: Chichester, UK: John Wiley & Sons, Ltd
Idioma: Inglês

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