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The Social Costs of Monopoly and Regulation: A Game Theoretic Analysis

Rogerson, William P. (1979) The Social Costs of Monopoly and Regulation: A Game Theoretic Analysis. Social Science Working Paper, 285. California Institute of Technology , Pasadena, CA. (Unpublished)

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The theory of rent-seeking is that monopoly profits attract resources directed into efforts to obtain these profits and that the opportunity costs of these resources are a social cost of monopoly. This article shows that monopoly rents remain untransformed to the extent that firms are inframarginal in the competition for them and thereby earn profits. Different fixed organization costs can produce inframarginal firms. In a situation where a monopoly franchise is periodically reassigned, the incumbent may possess an advantage in the next year's hearings. This also results in untransformed rents.

Item Type:Report or Paper (Working Paper)
Related URLs:
URLURL TypeDescription ItemLater version published in The Bell Journal of Economics
Additional Information:I was supported by National Scientific Foundation Grant Number SOC77-80573 to Robert H. Bates and Canada Council Doctoral Fellowship Number 452-793798 while writing this paper. I would like to thank James S. Jordan, Roger Noll, Jennifer Reinganum, and Louis Wilde for helpful comments. Published as Rogerson, William P. "The social costs of monopoly and regulation: A game-theoretic analysis." The Bell Journal of Economics (1982): 391-401.
Group:Social Science Working Papers
Funding AgencyGrant Number
Canada Council452-793798
Subject Keywords:Fixed costs, Monopoly, Economic regulation, Incumbents, Commercial regulation, Social costs, Trade secrets, Startup costs, Trade legislation, Rent seeking behavior
Series Name:Social Science Working Paper
Issue or Number:285
Record Number:CaltechAUTHORS:20171016-134259017
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Usage Policy:No commercial reproduction, distribution, display or performance rights in this work are provided.
ID Code:82379
Deposited By: Jacquelyn Bussone
Deposited On:16 Oct 2017 21:37
Last Modified:03 Oct 2019 18:53

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