The Social Cost of Monopoly Power

Donald Brown () and G.A. Wood

No 1466, Cowles Foundation Discussion Papers from Cowles Foundation, Yale University

Abstract: A general equilibrium analysis of monopoly power is proposed as an alternative to the partial equilibrium analyses of monopolization common to most antitrust texts. This analysis introduces the notion of a cost minimizing market equilibrium. The empirical implications of this equilibrium concept for antitrust policy is derived in terms of a family of equilibrium inequalities over market data from observations on a market economy with competitive factor markets. The social cost of monopoly power is measured using Debreu's coefficient of resource utilization. That is, we propose Pareto optimality as the ultimate objective of antitrust policy.

Keywords: Monopoly power; Antitrust economics; Applied general equilibrium analysis (search for similar items in EconPapers)
JEL-codes: D42 D58 D61 L12 L41 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-com and nep-mic
Date: 2004-05
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