I understand that monopoly profit is the return on capital (=profit) of the monopolist, which is larger than the normal profit in a competitive market. As monopoly rent I understand the income in excess of the factor cost (=rent) of the monopolist.
In this sense both would refer to the same thing. Is this correct?


1 Answer 1


Economic (not just monopoly) rent is what is otherwise known as produces surplus. And producer surplus is related to profit via

$$\text{Producer Surplus}=\text{Profit}+\text{Fixed Cost}$$

assuming that fixed cost is sunk.

  • $\begingroup$ Thank you. But isn't economic rent typically understood as payment "in excess of the costs needed to bring that factor into production”? In a long term perspective a decision will be made whether or not to incur Fixed Costs. That would imply that in the long term Profit and (monopoly) rent/Producer Surplus do correspond.(?) $\endgroup$
    – sba222
    Nov 14, 2020 at 17:10
  • $\begingroup$ @Steve222: Note that the equation I gave assumes that fixed costs are sunk. In the long run there is no sunk cost, so profit is the same as producer surplus. $\endgroup$
    – Herr K.
    Nov 14, 2020 at 19:07

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