Monopoly consumers and taxpayers


Problem: If government wanted to encourage a monopoly to produce the socially efficient quantity, should it use a per-unit tax or per-unit subsidy? Explain how this tax or subsidy would achieve the socially efficient level of output. Among the various interested parties - the monopoly firm, the monopoly's consumers, and other taxpayers - who would support the policy and who would oppose it?

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Microeconomics: Monopoly consumers and taxpayers
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