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Is there any downside wrt. how this would affect the GDP? Intuitively, this means more competition and higher GDP.
by Laaas 4y ago
Is there any downside wrt. how this would affect the GDP? Intuitively, this means more competition and higher GDP.
- hervature 4y agoHigher competition doesn't translate to higher GDP. In fact, monopolies produce more profits at the expense of consumers. If enough of your consumers are international, the national GDP would rise. If you are talking about competition for workers would increase costs and therefore prices would go up - that's inflation and should be discounted for in real GDP. If this is a meta argument that higher competition drives innovation which drives real GDP growth, then maybe.
- sclarisse 4y agoMonopolies earn their economic profits by raising prices beyond what a free market would charge, which suppresses supply, reducing the quantity produced below the efficient amount. That does reduce (real) GDP. (You might measure it wrong and end up with an increase to GDP if it’s not in your market basket.)
- hervature 4y agoYou raise a good point. I will have to think about this but my gut says that it would demand on the elasticities and probably only true in some linear version of supply and demand curves.
- downrightmike 4y agoIt would probably raise GDP since we wouldn't have people locked out of work for an unreasonable amount of time because of intimidation forced on them.