Monopoly innovation and welfare effects

Shuntian Yao and Lydia Gan

No 2010-10, Economics Discussion Papers from Kiel Institute for the World Economy

Abstract: In this paper we study the welfare effect of a monopoly innovation. Unlike many partial equilibrium models carried out in previous studies, general equilibrium models with non-price-taking behavior are constructed and analyzed in greater detail. We discover that technical innovation carried out by a monopolist could significantly increase the social welfare. We conclude that, in general, the criticism against monopoly innovation based on its increased deadweight loss is less accurate than previously postulated by many studies. --

Keywords: Monopoly; social welfare; technical innovation; general equilibrium (search for similar items in EconPapers)
JEL-codes: D50 D60 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ino and nep-tid
Date: 2010
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Persistent link: http://EconPapers.repec.org/RePEc:zbw:ifwedp:201010

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