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Monopoly Innovation and Welfare Effects

30 Pages Posted: 18 Dec 2010  

Shuntian Yao

Nanyang Technological University (NTU) - Centre for Research in Financial Services (CREFS)

Lydia L. Gan

University of North Carolina at Pembroke; Medical Tourism Research Center

Multiple version iconThere are 3 versions of this paper

Date Written: 2010

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.

Keywords: Monopoly, social welfare, technical innovation, general equilibrium

JEL Classification: D50, D60

Suggested Citation

Yao, Shuntian and Gan, Lydia L., Monopoly Innovation and Welfare Effects (2010). Economics Discussion Paper No. 2010-10. Available at SSRN: https://ssrn.com/abstract=1726766 or http://dx.doi.org/10.2139/ssrn.1726766

Shuntian Yao (Contact Author)

Nanyang Technological University (NTU) - Centre for Research in Financial Services (CREFS) ( email )

Nanyang Avenue
Division of Applied Economics
Singapore 639798
Singapore

Lydia L. Gan

University of North Carolina at Pembroke ( email )

P.O. Box 1510
Pembroke, NC 28372-1510
United States
9107754265 (Phone)
9105216750 (Fax)

HOME PAGE: http://www.uncp.edu/business/

Medical Tourism Research Center ( email )

P O Box 1510
One University Drive
Pembroke, NC 28372
United States
910-521-6592 (Phone)
910-521-6750 (Fax)

HOME PAGE: http://www.uncp.edu/mtrc/

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