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Monopoly Rights: A Barrier to Riches

  • Edward C. Prescott
  • Stephen L. Parente

Our thesis is that poor countries are poor because they employ arrangements for which the equilibrium outcomes are characterized by inferior technologies being used, and being used inefficiently. In this paper, we analyze the consequences of one such arrangement. In each industry, the arrangement enables a coalition of factor suppliers to be the monopoly seller of its input services to all firms using a particular production process. We find that eliminating this monopoly arrangement could well increase output by roughly a factor of 3 without any increase in inputs.

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File URL: http://www.aeaweb.org/articles.php?doi=10.1257/aer.89.5.1216
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Article provided by American Economic Association in its journal American Economic Review.

Volume (Year): 89 (1999)
Issue (Month): 5 (December)
Pages: 1216-1233

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Handle: RePEc:aea:aecrev:v:89:y:1999:i:5:p:1216-1233
Note: DOI: 10.1257/aer.89.5.1216
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