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

Rogerson, William P. (1982) The Social Costs of Monopoly and Regulation: A Game-Theoretic Analysis. Bell Journal of Economics, 13 (2). pp. 391-401. ISSN 0361-915X. http://resolver.caltech.edu/CaltechAUTHORS:20171016-143147796

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Abstract

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.


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Related URLs:
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http://www.jstor.org/stable/3003462JSTORArticle
http://resolver.caltech.edu/CaltechAUTHORS:20171016-134259017Related ItemSocial Science Working Paper 285
Additional Information:This work was supported by National Science Foundation Grant SOC77-0600-AI at the Institute for Mathematical Studies in the Social Sciences, Stanford University, and Canada Council Doctorate Fellowship 452-793798. I would like to thank James Ross, an anonymous referee, and the Editorial Board for very helpful comments.
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NSFSOC77-0600-AI
Canada Council452-793798
Record Number:CaltechAUTHORS:20171016-143147796
Persistent URL:http://resolver.caltech.edu/CaltechAUTHORS:20171016-143147796
Usage Policy:No commercial reproduction, distribution, display or performance rights in this work are provided.
ID Code:82384
Collection:CaltechAUTHORS
Deposited By: Katherine Johnson
Deposited On:16 Oct 2017 21:38
Last Modified:16 Oct 2017 21:38

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