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Strategic Middlemen and the Neutralization of Monopoly Power


  • Sherrill SHAFFER

    (FEDERAL RESERVE BANK OF NEW YORK , Banking Studides Department)


This paper shows how a monopolist can be induced to produce at the optimal output level and price, by utilizing a strategic middleman to represent to the monopolist a synthetic demand curve such that perceived marginal revenue equals true (inverse) demand. Conditions are derived for insuring the financial viability of such a middleman, and the inability of an unregulated market to enforce these conditions is discussed.

Suggested Citation

  • Sherrill SHAFFER, 1983. "Strategic Middlemen and the Neutralization of Monopoly Power," Discussion Papers (REL - Recherches Economiques de Louvain) 1983021, Universit√© catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
  • Handle: RePEc:ctl:louvre:1983021

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