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Looking at the Cost Side of "Monopoly."

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  • Aiginger, Karl
  • Pfaffermayr, Michael

Abstract

Welfare loss under oligopoly is defined as that part of consumer surplus which is lost and not regained by higher profits. In a model with asymmetric firms, this implies that the total welfare loss consists of the deadweight loss triangle plus a cost side inefficiency effect, due to the fact that in imperfect markets not all firms utilize the lowest cost technique. Using a flexible CV-model, the authors calculate these effects empirically for two relatively homogeneous industries (pulp/paper and cement). The deadweight loss triangles are shown to be smaller than the cost difference effect ('the staircase') for these industries. Copyright 1997 by Blackwell Publishing Ltd

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Bibliographic Info

Article provided by Wiley Blackwell in its journal Journal of Industrial Economics.

Volume (Year): 45 (1997)
Issue (Month): 3 (September)
Pages: 245-67

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Handle: RePEc:bla:jindec:v:45:y:1997:i:3:p:245-67

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Web page: http://www.blackwellpublishing.com/journal.asp?ref=0022-1821

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Cited by:
  1. Jun Chen & Zhiqi Chen, 2008. "The Quiet Life of a Monopolist: The Efficiency Losses of Monopoly Reconsidered," Carleton Economic Papers 08-04, Carleton University, Department of Economics, revised Sep 2011.
  2. Ela Glowicka, 2005. "Bailouts in a Common Market: A Strategic Approach," CIG Working Papers SP II 2005-20, Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG).
  3. Aiginger, K., 1998. "A framework for evaluating the dynamic competitiveness of countries," Structural Change and Economic Dynamics, Elsevier, vol. 9(2), pages 159-188, June.
  4. Gunther Tichy, 1998. "Wettbewerbspolitik und die 'Grenzen der Größe'," Wirtschaft und Gesellschaft - WuG, Kammer für Arbeiter und Angestellte für Wien, Abteilung Wirtschaftswissenschaft und Statistik, vol. 24(3), pages 313-330.
  5. Karl Aiginger & Michael Pfaffermayr, 1999. "Product Quality, Cost Asymmetry and the Welfare Loss of Oligopoly," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 6(2), pages 165-180.
  6. D. P. T. Young, 2000. "Firms' Market Power, Endogenous Preferences and the Focus of Competition Policy," Review of Political Economy, Taylor & Francis Journals, vol. 12(1), pages 73-87.
  7. Günter Lang, Peter Welzel, 1999. "Mergers Among German Cooperative Banks. A Panel-based Stochastic Frontier Analysis," Working Paper Series B 1999-03, Friedrich-Schiller-Universität Jena, Wirtschaftswissenschaftliche Fakultïät.
  8. christoph Engel, 2005. "Voice over IP. Competition Policy and Regulation," Working Paper Series of the Max Planck Institute for Research on Collective Goods 2005_26, Max Planck Institute for Research on Collective Goods.
  9. Lars-Hendrik R�ller & Frode Steen, 2006. "On the Workings of a Cartel: Evidence from the Norwegian Cement Industry," American Economic Review, American Economic Association, vol. 96(1), pages 321-338, March.
  10. Aiginger, Karl & Mueller, Dennis C. & Weiss, Christoph, 1998. "Objectives, topics and methods in industrial organization during the nineties: Results from a survey," International Journal of Industrial Organization, Elsevier, vol. 16(6), pages 799-830, November.
  11. Manfred Neumann, 1999. "Monopoly Welfare Losses in the Long Run," Empirica, Springer, vol. 26(1), pages 1-9, March.
  12. Nikolaus Fink, 2011. "SSNIP, state-owned enterprises, public goods and complements," Empirica, Springer, vol. 38(3), pages 381-388, July.

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