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Questions tagged [monopoly]

A market structure in which there is a single firm acting as supplier.

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How do I find optimal price or maximise profit in a monopolistic market?

How do I find the optimal price for a monopolist given the monopolist's cost function and market demand? I have $Profit(y) = p*y + C(y)$ where $p$ is price, $y$ is output, and $C(y)$ is total cost. ...
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Can marginal revenue be increasing?

As per my calculations, the derivative of the MR curve is given by: MR'(q)=2p'(q)+qp''(q), where p(q) is the inverse demand curve. Therefore,for a downward sloping demand curve, if the second ...
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Is Luxottica a monopoly?

Luxottica is a corporation that produces glasses. They own most brands that I can think of, with a list available here. They are also planning to merge with another large glasses producer Essilor. I ...
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How does elasticity impact market efficiency?

I am wondering how the price elasticity of demand (or supply) impacts market efficiency. A more specific question - can we say that in a monopolized market elasticity will be low, and that in a ...
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What does liberal economic theory say about monopolies?

Ludwig von Mises in his book "Liberalism: In the Classical Tradition" writes that in liberal economic the monopolies are rare and have a tendency to disappear. For an outlooker like me, however, his ...
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Monopoly equilibrium with a completely inelastic demand [closed]

What is the impact of an inelastic demand function on a monopoly production and pricing strategy ? Theory states, that a monopoly will strive to maximize its profits, by arriving to a point where the ...
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What is e-commerce's market structure?

What is e-commerce's market structure? From what angle should this be looked at? As Amazon is a part of many markets.
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Will the market for driverless cars move toward a monopoly?

There is a short article in The Economist (link below) where the writer makes the claim that because there are firms the exhibit economies of scale - in driverless technology - they will eventually ...
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Why do anti-trust regulators in China need to approve NXP's takeover?

Qualcomm is currently awaiting Chinese regulatory approval for its acquisition of rival NXP. Both companies aren't based in China. I'd understand that vehicles like tariffs can be used by countries ...
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Monopoly and Productive Efficiency

Can a monopoly be productively efficient in the short and long run? Would the minimum of the LRATC curve have to be where marginal revenue intersects marginal cost in both cases, and is that possible? ...
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Have countries with a monopoly on a resource in an area ever established 1-company monopolies in that area to drive up price?

Say its the 18th century and South America wants tea. Britain, for example could have a monopoly on the tea trade in the area. However if multiple British companies sell in the area they will drive ...
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Monopolist engaging in international trade

A monopolist faces a demand curve given by $P=60-2Q$ and has total costs given by $TC=Q^2$. Now suppose that the country in which this monopolist is located decides to engage in international trade. ...
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Can't government experiment on price in the case of a monopoly?

In the lecture given by Jon Gruber at MIT, he talks about the governmental regulations on monopolies, and he states that (in short) for government to regulate a monopoly, it needs to know the ...
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Taxing a monopoly

can someone explain me why in some books the Demand and marginal revenue moves and but in other books is the marginal cost that moves. Is this like taxing the demand vs taxing the supply? so the ...
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34 views

How to find right MRP_L in this economic problem?

Economic problem from my textbook (here is my translation from Russian): There is a firm that is both monopoly and monopsony. It's monopoly on market of its product and it's monopsony on labor market ...
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$p(0)\geq c'(0)$ in monopoly

$p(0)\geq c'(0)$ is assumed so that the inverse demand curve originates above the marginal cost curve. But what is the intuition behind this assumption? The highest willing-to-pay consumer is more ...
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255 views

Price elasticity and optimal pricing in a monopoly with zero marginal cost

I am having trouble understanding how to calculate the optimal price P for a good and understand the optimal price elasticity of demand in the following condition: The firm is a monopoly seeking to ...
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Monopoly - Where is the Markup formula derived from?

Problem: My lecturer wrote the marginal revenue formula before writing the markup formula, indicating some sort of similarity between the two. How it was written on the board: Market Power ...
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Why are some natural monopolies protected by the law from competition?

It just doesn't make sense. Any try to challenge a natural monopoly is fruitless (at the best) or an economic suicide (at the worst). Why would you forbid companies from doing such stupid move? It's ...
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Why would a natural monopoly lose money when MC=P, but a competitive firm would get positive accounting profit?

I assume that the natural monopoly is required by law to have maximum price=MC. According to this video such regulation would require constant subsidies for monopoly, because otherwise it would go ...
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Can a monopoly INCREASE the market surplus compared with a competitive market?

Monopolies are often blamed for DWLs(Dead Weight Losses), while competitive markets believed to work without DWLs (assuming zero taxes/subsidies and zero externalities). But I think I found an ...
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710 views

Block pricing vs Perfect price discrimination

I have just learned about Perfect price discrimination and block pricing. And I was wondering, in the case of these two graphs Block pricing & Perfect price discrimination. Why, in case of the ...
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2answers
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Free market defense against anti-competitive behavior?

One argument against a completely free market economy without "government" oversight is the tendency towards anti-competitive behavior. The argument is that government laws are needed to prevent anti-...
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What is the definition of social welfare in monopoly?

I'm studying problem that requires me to calculate social welfare in a monopoly setting. But I dont know what social welfare is, and I can't find it in my book or by googling. What am I asked to ...
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Monopolies are just a mathematical misunderstanding

A little head-scratcher (and a good example why we should be careful with notation). Consider a profit maximizing monopoly, that solves over price $$\max \pi = PQ(P) - C(Q(P)) \tag{1}$$ Following ...
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Hayek's defense of competition regulation

This article claims Hayek endorsed competition regulation: As it evolved, neoliberalism became more strident. Hayek’s view that governments should regulate competition to prevent monopolies from ...
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Can monopolistic dead weight loss persist without government intervention? If so how?

Can monopolistic dead weight loss persist without government intervention? If so how? I am researching monopolies and find dead weight loss proposed as an evil of monopolies but i can not find any ...
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Price discriminating monopolist question

A price discriminating monopolist sells in two markets. Inverse demand in market 1 is given by: $$P_1(Q_1) = 80 - (1/2)Q_1$$ and inverse demand in market 2 is given by: $$P_2(Q_2) = 100 - Q_2$$ The ...
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How effective is progressive tax at regulating monopoly?

Regardless of the morality of progressive taxes, the economical benefit of progressive tax is at least debatable. But could a highly progressive tax replace at least some of the american/european anti-...
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Monopoly marginal cost [closed]

I have recently been stumped on a microeconomics question where it gives a monopoly firm, its operating ATC (average total cost), price (average revenue), and quantity traded. First thing it wants me ...
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Determining whether an industry is a natural monopoly/economy of scope

Assume that $$C(x,y) = 11 + x + y ; C(x,0) = 6 + x ; C(0,y) = 8 + y$$ (a) Is this industry a natural monopoly? Does the industry exhibit economies of scope? Explain. I can see that the industry ...
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Microeconomy, monopoly, maximum profit - two different answers when solving exercise in two different ways

Suppose that monopoly produces product $X$. Let $MC = 20$, Quantity demanded function is given by equation $Q_d = 600 - 2P$ (where $Q_d$ - demand curve, $P$ - price). Calculate the amount of ...
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Exercise about Monopoly price charging

In a two-period lived economy, one consumer wishes to buy a TV set in period 1. The consumer lives for two periods, and is willing to pay a maximum price of $100 per period of TV usage. In period ...
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Simple equilibrium in monopoly question

Given an inverse demand function for hangars: $$P = 3 - \frac{Q}{16,000}$$ and constant marginal cost of $1$, what is the equilibrium price and quantity of hangars in a monopoly? In a perfectly ...
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How to determine the price a monopolist will set when the demand curve the firm faces isn't known?

I'm reviewing the following question from my microeconomics course notes. I don't understand how to do part (b). A firm faces a perfectly elastic demand curve because the product it sells has a ...
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Simplifying a monoplist's objective function under incomplete information

I am working through Rochet and Stohle (2003) chapter on multi-dimensional screening, and I am struggling filling in the blanks between equation (2.1) p. 154, and its simplified form on page 155. In ...
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Effect of a subsidy on a monopoly

I'm trying to understand how a subsidy on a monopoly would affect the deadweight loss. I know a subsidy shifts the marginal cost curve downwards, creating a new equilibrium price (price decreases) and ...
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Monopoly and Taxes (Nicholson Exercise)

Hello I'm working through Microeconomic Theory : Basic Principles and Extensions of Nicholson and Snyder 10e, for an exam and I fail to get how to answer this question (p.517) : A specific tax is a ...
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1answer
152 views

How much is someone willing to pay to own a monopoly?

I'm currently working on a problem from Intermediate Microeconomics Workouts by Varian and I've become stuck on a particular question to do with monopolies. We are given the demand curve for a ...
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Why is the Marginal Cost (MC) of a monopoly horizontal

I presume it's because they're price makers, but this doesn't really answer much. Furethermore, in a monopoly is it Marginal Cost or Long run marginal cost that's horizontal?
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Extraction and royalty time path for a non-renewable resource under a monopolist assumption

I am trying to understand the time path of extraction and royalty (price) for a non-renewable resource under a monopolist framework. The problem is that in the main books on environmental/resource ...
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Would you consider airport parking to be a monopoly or a monopolistic market?

If you look at it one way and group the different companies that offer parking, it could be a monopoly as that is the only place you can park. On the other hand, the different companies offer ...
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Cournot Model Monopoly example

Good day In my Microeconomics course, we are handling the 4 imperfect competition models. Currently we are discussing the Cournot Model, however I am unsure about a certain example. This is given as ...
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Monopoly's MC, AVC and TVC

I do not quite understand the statement "total variable cost is the area under the marginal cost curve" Does it means MC inserts at the AVC at the lowest point (see picture)? But why AVC is drawn and ...
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What exactly is a trust?

In my history class, we're studying the Industrial Revolution and how Rockefeller came to dominate the oil industry with his Standard Oil company. According to our textbook, a man named Samuel Dodd (...
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Is anti-competitive behavior a threat in a society with free trade and no regulation?

A question that I have is whether a truly economically free society needs to (or should) have laws against anti-competitive behavior. Take liquor distribution as an example. In the United States ...
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How to compute Social Welfare in this model?

The first part of this scientific article analyzes reward-based crowdfunding. The assumptions are: Seller is a monopolist Unit mass of consumers Unit demand Two periods Individuals are identified by $...
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886 views

Why does demand curve shift in, in a monopolistic competitive market?

In a monopolistic competitive market, demand curves shift in, if more firms enter the market. I can't seem to wrap my head around it. Demand remains the same, supply has increased. Shouldn't entry of ...
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Menu-pricing with three consumer groups

I want to analyze the following setting: An entrepreneur (with monopoly power) sells a product in two periods. In period 1 there are two consumer groups (denoted by 1 and 2) and in period 2 there is ...
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Calculate deadweight loss from cost and inverse demand function in monopoly [closed]

Consider a monopolist with inverse demand p = 200 - 2*q. The firm's total cost function is C(q) = 100 + 20*q. What is the deadweight loss of monopoly? To my understading, since we don't have any ...