Benefits of Monopoly and Regulating Monopoly

Benefits of Monopoly

a) Scale Economies:

Oliver Williamson (1968) has suggested that if a merger to monopoly results in a decrease in industry-wide costs, these cost savings could easily compensate for any increase in allocative inefficiency.

779_scale economies.jpg

It is the value of the resources that were required under competition to produce QM units however isn’t required to produce that output level under monopoly. Williamson’s point is that it doesn’t take very large cost savings to compensate for the allocative inefficiency.

b) Research and Development (R&D):

Joseph Schumpeter (1965) argued that market power is a necessary incentive for research and development. He contended that without the lure of monopoly profits firms would have insufficient incentives to undertake research and development. Furthermore it was a mistake to focus on allocative inefficiency if that inefficiency made possible innovation of new products and technologies. For it is this type of innovation that is responsible for economic growth and substantial qualitative increases in living standards.

Regulating Monopoly:

a) Marginal Cost Pricing

b) Average Cost Pricing

c) Two-tier Pricing

d) Rate-of-Return Regulation

Latest technology based Microeconomics Online Tutoring Assistance

Tutors, at the www.tutorsglobe.com, take pledge to provide full satisfaction and assurance in Microeconomics help via online tutoring. Students are getting 100% satisfaction by online tutors across the globe. Here you can get homework help for Microeconomics, project ideas and tutorials. We provide email based Microeconomics help. You can join us to ask queries 24x7 with live, experienced and qualified online tutors specialized in Microeconomics. Through Online Tutoring, you would be able to complete your homework or assignments at your home. Tutors at the TutorsGlobe are committed to provide the best quality online tutoring assistance for Microeconomics Homework help and assignment help services. They use their experience, as they have solved thousands of the Microeconomics assignments, which may help you to solve your complex issues of Microeconomics. TutorsGlobe assure for the best quality compliance to your homework. Compromise with quality is not in our dictionary. If we feel that we are not able to provide the homework help as per the deadline or given instruction by the student, we refund the money of the student without any delay.