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The model was first presented by Oliver Williamson in his 1968 paper "Economies as an Antitrust Defense: The welfare tradeoffs" in the American Economic Review. [2] Williamson argued that ignoring efficiencies that may result from proposed mergers in antitrust law "fail[ed] to meet the basic test of economic rationality". [3]
The Brander–Spencer model is an economic model in international trade originally developed by James Brander and Barbara Spencer in the early 1980s. The model illustrates a situation where, under certain assumptions, a government can subsidize domestic firms to help them in their competition against foreign producers and in doing so enhances national welfare.
Welfare economics is a field of economics that applies microeconomic techniques to evaluate the overall well-being (welfare) of a society. [ 1 ] The principles of welfare economics are often used to inform public economics , which focuses on the ways in which government intervention can improve social welfare .
If the monopoly were permitted to charge individualised prices (this is termed third degree price discrimination), the quantity produced, and the price charged to the marginal customer, would be identical to that of a competitive company, thus eliminating the deadweight loss; however, all gains from trade (social welfare) would accrue to the ...
The efficiency loss from monopoly arises from the fact that high-profit industries produce too little output, and low-profit industries produce too much output. The net welfare cost is the sum of the gains that would be obtained if output were reallocated in such a way as to bring the rate of profit in each industry to the economy-wide average.
Natural monopoly; Open society ... effect on economic growth and economic welfare while free trade and the reduction of ... and empirical effects of free trade ...
Pricing, quantity, and welfare effects of a binding price ceiling. There is a substantial body of research showing that under some circumstances price ceilings can, paradoxically, lead to higher prices. The leading explanation is that price ceilings serve to coordinate collusion among suppliers who would otherwise compete on price.
This effect is demonstrated in the diagram on the right. Here the minimum wage is w '', higher than the monopsonistic w . Because of the binding effects of minimum wage and the excess supply of labour (as defined by the monopsony status), the marginal cost of labour for the firm becomes constant (the price of hiring an additional worker rather ...