Consumer Resistance and Monopoly Behavior under Franchise Contestability

Raul Fabella

Public Choice, 1993, vol. 76, issue 3, 263-71

Abstract: The probability of a deregulation under antimonopoly consumer lobby is generated at the Cournot-Nash equilibrium of a lobbying game that depends on the monopoly rent and the deadweight loss. This probability is increasing and convex in monopoly price. When the deregulation probability constraint is binding, the monopolist's price rises with the number of consumers, the competitive price, and the given ceiling probability. The social cost of a monopoly under franchise contestability differs from the Posner measure. Copyright 1993 by Kluwer Academic Publishers

Date: 1993
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