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Some random thoughts: - Economists don't like monopolies due to dead-weight loss. However there is only dead-weight loss if the monopolist cannot price-discrim
by elchief 12y ago
Some random thoughts:
- Economists don't like monopolies due to dead-weight loss. However there is only dead-weight loss if the monopolist cannot price-discriminate. If they can price-discriminate, it's simply of a transfer of wealth from customers/employees/suppliers to shareholders. So there is some room to argue against it on efficiency grounds (if they can't price-discriminate), and definitely room to argue against on equality grounds (if you care about such things).
- Unregulated monopoly is the most profitable form of business. Abusive monopolies are probably more profitable than nice ones. Abusive monopolies are illegal (?). As a manager at a US public company, you are legally required to maximize shareholder value, ie try to create an abusive monopoly, ie break the law.
- Monopolies are bad for everyone except the shareholders and probably management
- Oligopolies probably do more R&D than monopolies, as monopolies don't have an incentive to spend money on research. Perfect competition leaves no profit to spend on R&D
- Tloewald 12y agoPerfect competition might assume R&D costs as an expense of doing business, so your last point is highly debatable. In general, technological change changes the boundary values within which economic analysis produces useful results, so the best economics can do is tell you what impact a technological change might have once that change is well-understood.
- lazylizard 12y agoif the R&D were any good, then there won't be perfect information though...