The Social Cost of Monopoly Power

25 Pages Posted: 30 Jul 2004

See all articles by Donald Brown

Donald Brown

Yale University - Cowles Foundation

G. A. Wood

G.A. Wood and Associates

Date Written: July 2004


A general equilibrium analysis of monopoly power is proposed as an alternative to the partial equilibrium analyses of monopolization common to most antitrust texts. This analysis introduces the notion of a cost minimizing market equilibrium. The empirical implications of this equilibrium concept for antitrust policy is derived in terms of a family of equilibrium inequalities over market data from observations on a market economy with competitive factor markets. The social cost of monopoly power is measured using Debreu's coefficient of resource utilization. That is, we propose Pareto optimality as the ultimate objective of antitrust policy.

Keywords: Monopoly power, Antitrust economics, Applied general equilibrium analysis

JEL Classification: D42, D58, D61, L12, L41

Suggested Citation

Brown, Donald J. and Wood, G. A., The Social Cost of Monopoly Power (July 2004). Available at SSRN:

Donald J. Brown (Contact Author)

Yale University - Cowles Foundation ( email )

Box 208281
New Haven, CT 06520-8281
United States

G. A. Wood

G.A. Wood and Associates

New Haven, CT 06501
United States

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