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The Welfare Effects of Monopoly Innovation

Author

Listed:
  • Shuntian Yao

    (Division of Economics,School of Humanities and Social Sciences, Nanyang Technological University, Singapore)

  • Lydia L. Gan

    (Division of Economics,School of Humanities and Social Sciences, Nanyang Technological University, Singapore)

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 are constructed and analyzed in greater details. 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 dead weight loss is less accurate as previously postulated by many studies.

Suggested Citation

  • Shuntian Yao & Lydia L. Gan, 2006. "The Welfare Effects of Monopoly Innovation," Economic Growth Centre Working Paper Series 0609, Nanyang Technological University, School of Social Sciences, Economic Growth Centre.
    • Handle: RePEc:nan:wpaper:0609
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • D50 - Microeconomics - - General Equilibrium and Disequilibrium - - - General
    • D60 - Microeconomics - - Welfare Economics - - - General

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