Monopoly Innovation and Welfare Effects
نویسندگان
چکیده
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. JEL D50; D60
منابع مشابه
The Effect of Litigation on Intellectual Property and Welfare
This paper shows that “wasteful” litigation about intellectual property may be welfare enhancing. The aim of an intellectual property protection system is to solve the trade-off between ex-ante innovation incentive and ex-post monopoly welfare loss. The litigation about intellectual property in court decreases the expected rent from intellectual property, therefore reducing the incentive to inn...
متن کاملProcess and product innovation in a vertically differentiated monopoly
We analyse product and process innovations in a monopoly model with vertical differentiation. The incentive towards both kinds of innovation is always larger under social planning than under monopoly. Therefore, the comparison between the two regimes’ welfare performance should account for the possibility that the planner and the monopolist adopt different technologies and supply different prod...
متن کاملInnovation, market structure and the holdup problem: investment incentives and coordination
I analyze the innovation incentives under monopoly and duopoly provision of horizontally differentiated products purchased via bilateral negotiations, integrating the market structure and innovation literature with the holdup literature. I show that competition can improve local incentives for non-contractible investment. Because innovation levels are generally strategic substitutes, however, t...
متن کاملNot so Demanding: Preference Structure, Firm Behavior, and Welfare∗
We introduce a new perspective on how assumptions about preferences and demand affect firm behavior and economic performance. Our key innovation is the “Demand Manifold,” which links the elasticity and convexity of an arbitrary demand function. We show that it is a sufficient statistic for many comparative statics questions, leads naturally to some new families of demand functions, and relates ...
متن کاملTechnology Adoption and Welfare under a Monopoly: An Illustration of Microeconomic Policy Analysis
Graphical presentation in textbooks of the problem of technology adoption by a monopolist always assumes a uniformly downward shift in the marginal cost curve. My purpose in this article is to show that, despite its convenience, this nonintersecting marginal cost assumption obscures some of the workings of a monopoly and incorrectly suggests that welfare improvements and adoption are synonymous...
متن کامل