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

  • William P. Rogerson
Chapter
Part of the Topics in Regulatory Economics and Policy book series (TREP, volume 1)

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.

Keywords

Social Cost Fixed Cost Innovative Activity Symmetric Equilibrium Aggregate Expenditure 
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Copyright information

© Springer Science+Business Media New York 1988

Authors and Affiliations

  • William P. Rogerson

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