To "B" or Not to "B": A Welfare Analysis of Breaking Up Monopolies in an Endogenous Growth Model

Danyang Xie

No 2000/189, IMF Working Papers from International Monetary Fund

Abstract: This paper studies the welfare consequences of a government regulation that forces a patented equipment to be supplied by a number of independent producers. On the one hand, such a regulation hurts the value of a patent and therefore reduces activities in the R&D sector. On the other hand, the enhanced competition for the equipment improves efficiency in the manufacturing sector. Should monopolies protected by intellectual property rights be broken up? The answer is “no” in a Romer-type growth model, but there is sufficient reason to believe that the answer could be “yes” in a model advocated by Jones (1995).

Keywords: WP; production function; R&D; Growth; Competition Policy; welfare analysis; Cobb-Douglas production function; Romer model; government regulation; monopoly price distortion; welfare point of view; welfare cost; welfare implication; Human capital; Manufacturing; Real interest rates (search for similar items in EconPapers)
Pages: 18
Date: 2000-11-01
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Citations: View citations in EconPapers (3)

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Working Paper: To B or Not To B: A Welfare Analysis of Breaking Up Monopolies in an Endogenous Growth Model (2002)
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