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Monopoly innovation and welfare effects

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  • Yao, Shuntian
  • Gan, Lydia

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.

Suggested Citation

  • Yao, Shuntian & Gan, Lydia, 2010. "Monopoly innovation and welfare effects," Economics Discussion Papers 2010-10, Kiel Institute for the World Economy (IfW Kiel).
    • Handle: RePEc:zbw:ifwedp:201010
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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Static innovation
      by Economic Logician in Economic Logic on 2010-03-29 19:08:00

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    More about this item

    Keywords

    Monopoly; social welfare; technical innovation; general equilibrium;
    All these keywords.

    JEL classification:

    • D50 - Microeconomics - - General Equilibrium and Disequilibrium - - - General
    • D60 - Microeconomics - - Welfare Economics - - - General

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