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The Social Costs of Monopoly in an Open Economy


  • Klaus Stegemann


In a small open economy trading perfect substitutes at given world-market prices, monopoly power cannot exist unless the domestic market is protected. This assessment of monopoly changes radically if we relax the small-country assumption and/or the assumption that imports are perfect substitutes of domestic goods. In either case, a domestic monopoly retains some market power even in the absence of protection. In an open economy there is the familiar monopoly welfare loss due to underconsumption and a new loss due to excessive importation.
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Suggested Citation

  • Klaus Stegemann, 1984. "The Social Costs of Monopoly in an Open Economy," Canadian Journal of Economics, Canadian Economics Association, vol. 17(4), pages 718-730, November.
  • Handle: RePEc:cje:issued:v:17:y:1984:i:4:p:718-30

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    Cited by:

    1. Gumus, Erdal, 2006. "The Social Costs of Monopoly: A Survey And An Evaluation," MPRA Paper 42107, University Library of Munich, Germany.

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