Abstract
Suppose that a regulatory board meets every period and assigns the monopoly franchise for an industry to one of a competing number of entrants; the successful firm then earns It dollars in monopoly profits for that period. The theory of rent-seeking suggests that firms will in the aggregate spend some fraction of π dollars competing for the franchise by hiring lawyers, making presentations, etc. To the extent that these resources are misallocated, they represent a social cost of monopoly in addition to the normal deadweight loss.
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© 1988 Springer Science+Business Media New York
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Rogerson, W.P. (1988). The Social Costs of Monopoly and Regulation: A Game-Theoretic Analysis. In: Rowley, C.K., Tollison, R.D., Tullock, G. (eds) The Political Economy of Rent-Seeking. Topics in Regulatory Economics and Policy, vol 1. Springer, Boston, MA. https://doi.org/10.1007/978-1-4757-1963-5_5
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DOI: https://doi.org/10.1007/978-1-4757-1963-5_5
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