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Looking at the Cost Side of "Monopoly."

Author

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  • Aiginger, Karl
  • Pfaffermayr, Michael

Abstract

Welfare loss under oligopoly is defined as that part of consumer surplus which is lost and not regained by higher profits. In a model with asymmetric firms, this implies that the total welfare loss consists of the deadweight loss triangle plus a cost side inefficiency effect, due to the fact that in imperfect markets not all firms utilize the lowest cost technique. Using a flexible CV-model, the authors calculate these effects empirically for two relatively homogeneous industries (pulp/paper and cement). The deadweight loss triangles are shown to be smaller than the cost difference effect ('the staircase') for these industries. Copyright 1997 by Blackwell Publishing Ltd

Suggested Citation

  • Aiginger, Karl & Pfaffermayr, Michael, 1997. "Looking at the Cost Side of "Monopoly."," Journal of Industrial Economics, Wiley Blackwell, vol. 45(3), pages 245-267, September.
    • Handle: RePEc:bla:jindec:v:45:y:1997:i:3:p:245-67
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    Citations

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    Cited by:

    1. christoph Engel, 2005. "Voice over IP. Competition Policy and Regulation," Discussion Paper Series of the Max Planck Institute for Research on Collective Goods 2005_26, Max Planck Institute for Research on Collective Goods.
    2. Lars-Hendrik Röller & Frode Steen, 2006. "On the Workings of a Cartel: Evidence from the Norwegian Cement Industry," American Economic Review, American Economic Association, vol. 96(1), pages 321-338, March.
    3. Nikolaus Fink, 2011. "SSNIP, state-owned enterprises, public goods and complements," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 38(3), pages 381-388, July.
    4. D. P. T. Young, 2000. "Firms' Market Power, Endogenous Preferences and the Focus of Competition Policy," Review of Political Economy, Taylor & Francis Journals, vol. 12(1), pages 73-87.
    5. Jun Chen & Zhiqi Chen, 2011. "The quiet life of a monopolist: The efficiency losses of monopoly reconsidered," Frontiers of Economics in China, Springer;Higher Education Press, vol. 6(3), pages 389-412, September.
    6. Robert A. Ritz, 2018. "Oligopolistic competition and welfare," Chapters, in: Luis C. Corchón & Marco A. Marini (ed.), Handbook of Game Theory and Industrial Organization, Volume I, chapter 7, pages 181-200, Edward Elgar Publishing.
    7. Okumura, Yasunori, 2016. "Individual transferable quotas in Cournot competition," Economic Modelling, Elsevier, vol. 55(C), pages 315-321.
    8. Aiginger, K., 1998. "A framework for evaluating the dynamic competitiveness of countries," Structural Change and Economic Dynamics, Elsevier, vol. 9(2), pages 159-188, June.
    9. Lang, Gunter & Welzel, Peter, 1999. "Mergers among German Cooperative Banks: A Panel-Based Stochastic Frontier Analysis," Small Business Economics, Springer, vol. 13(4), pages 273-286, December.
    10. Karl Aiginger & Michael Pfaffermayr, 1999. "Product Quality, Cost Asymmetry and the Welfare Loss of Oligopoly," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 6(2), pages 165-180.
    11. Ela Glowicka, 2005. "Bailouts in a Common Market: A Strategic Approach," CIG Working Papers SP II 2005-20, Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG).
    12. Aiginger, Karl & Mueller, Dennis C. & Weiss, Christoph, 1998. "Objectives, topics and methods in industrial organization during the nineties: Results from a survey," International Journal of Industrial Organization, Elsevier, vol. 16(6), pages 799-830, November.
    13. Karl Aiginger, 2008. "The Impact of Competition on Macroeconomic Performance," Chapters, in: Klaus Gugler & B. Burcin Yurtoglu (ed.), The Economics of Corporate Governance and Mergers, chapter 14, Edward Elgar Publishing.
    14. Gunther Tichy, 1998. "Wettbewerbspolitik und die "Grenzen der Größe"," Wirtschaft und Gesellschaft - WuG, Kammer für Arbeiter und Angestellte für Wien, Abteilung Wirtschaftswissenschaft und Statistik, vol. 24(3), pages 313-330.
    15. Manfred Neumann, 1999. "Monopoly Welfare Losses in the Long Run," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 26(1), pages 1-9, March.

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