Presence Of Monopoly Research Articles

Аlgorithms for determining equilibrium states of an economy under the presence of monopolies and consumers with different behaviours

The equilibrium model of Walrassian type is applied to a description of a reaction of an economy system on an influence of selected factors. The research involves an adaptation of an equilibrium problem in case of an economy with different behaviours of consumers to use simpler solving methods that correspond to the case of exclusively insatiable consumers in the economy. An application of iterative methods for solving the economy equilibrium problem is justified. The conditions on the specified model characteristics that lead to a convergence of the iterative methods are presented. The proposed algorithm that determines the equilibrium characteristics allows to determine the conditions for reaching equilibrium states with specified properties.

On dynamics of an open economy under presence of monopolies and financial obligations

An investigation was conducted of an open economy consisting of insatiable consumers. Some consumers can produce own goods to gain a profit while other consumers obtain an external support. The equilibrium is of a Walrassian type. The model takes into account an economy with monopolies and financial obligations of its subjects. The financial obligations lead to the capital redistribution between subjects of the economy. A formation of consumers' preferences depends on the financial obligations. There exists an equilibrium of such an economy. Obtained equilibrium values of model characteristics agree on an acceptable level of the consumption satisfaction of all economy subjects. The values of the capital redistribution are determined at which the levels of the consumption belong to the defined set of values. Based on the evolution of the financial obligations, the description of economy dynamics was proposed.

On algorithms of a determination of equilibrium states of an open economy under presence of monopolies

On algorithms of a determination of equilibrium states of an open economy under presence of monopolies

Influence of Consumer Preferences on the Equilibrium in an Open Economy

This investigation describes possible equilibrium states of an open economy under the presence of monopolies. Walrasian equilibrium is considered. Each subject of the economy is an insatiable consumer. The structure of consumption in the economy depends on volumes of production of goods. An algorithm is proposed to solve the problem of economic equilibrium. The presented constraints on model characteristics provide the existence of equilibrium in the economy. The possibility of staying the economy in an equilibrium state with specified intervals of values of selected characteristics is revealed. The achievement of a desirable equilibrium state is provided by the choice of levels of taxation of monopolies.

An Evaluation of Production Business Process Costs Using a Time-labour Approach

The paper explains the reasons that make it difficult to carry out an objective evaluation of ways to reduce the total costs of production. It also examines the nature of individual costs and expenses and of the production factors that are needed for the realization of business activities. It also sets out the advantages and disadvantages of methods of evaluating production factors, and of instruments for evaluating the total costs associated with them. It describes the time-labour nature of individual production costs. It also shows the different stances taken by current total cost-pricing methodologies from the standpoints of: the manufacturer’s interests, utility, the impact of market competition, and the presence of monopolies in the market. The unsuitability of such an approach when evaluating the real value of the total costs of goods is shown. It is demonstrated that labour has its natural and market price, and on this basis three variants showing the correlation between cost and price of labour-power are formulated. We propose to measure total costs not in price terms, but on a time-labour principle, based on the input of working time, since labour is one of the main factors of production. An estimate of production costs based on time-labour avoids the distorting impact of value, as it reflects the original time-labour substance within total costs.

Socially-Optimal Level of Co-Determination of Labor and the European Directive on Workers' Councils

In the past employee interest and influence have been presented mainly through trade unions and collective bargaining (economic regulation). Socially optimal levels of co-determination may be prevented by the existence of high fixed costs of establishing councils. Job security can resolve the adverse selection problem and raise economic efficiency i.e. worker or agent will work efficiently or socially optimal. Co-determination reinforces well functioning social democracy, recent studies discover that consultation and participation increase than innovativeness of the company. The US and EU approach to employment are different under common and civil law, that differ in many ways. The US employment –at- will is liberal individualist model, laissez-faire approach and any regulation is considered to be potentially welfare reducing. And mandatory employment rights model; EU model that seeks it’s rationale in the previously mentioned market failures (agency problems, hold-up problems) caused by asymmetric information and incomplete employment contracts, and the presence of monopolies, monopsonies that reduce workers mobility. Harmonious relations between” social partners” – labor and management are the aim of the European Work Council directive. European law continues to focus on workers and shareholders interest.

Simulating Tariffs vs. Quotas with Domestic Monopoly

The pro-competitive effects of international trade in the presence of monopoly, and the deleterious effects of protection, are topics commonly taught in both international trade and industrial organization classes. We present a numerical simulation model for classroom use, built in Excel, that is designed to explore the effect of international trade on a monopoly, and how the effects of protecting the monopoly may differ depending on whether a tariff or a quota is chosen. We describe the model, key results, and how to integrate the approach into the curriculum.

Cap and trade policies in the presence of monopoly and distortionary taxation

We extend an analytical general equilibrium model of environmental policy with pre-existing labor tax distortions to include pre-existing monopoly power as well. We show that the existence of monopoly power has two offsetting effects on welfare. First, the environmental policy reduces monopoly profits, and the negative effect on income increases labor supply in a way that partially offsets the pre-existing labor supply distortion. Second, environmental policy raises prices, so interaction with the pre-existing monopoly distortion further exacerbates the labor supply distortion. This second effect is larger, for reasonable parameter values, so the existence of monopoly reduces the welfare gain (or increases the loss) from environmental restrictions.

The Impact of Irreversibility, Uncertainty and Timing Options on Deprival Valuations and the Detection of Monopoly Profits

This paper has two purposes. The first is to derive rules identifying the deprival value of an asset (i) which is irreversible to one extent or another; (ii) the benefit stream of which is subject to continuing uncertainty; and (iii) for which an option to wait exists as to when to reacquire should the owner be deprived of it. The second is to consider whether accounting rates of return employing these deprival value rules can be developed to help in the detection of monopoly profits in circumstances where investment decision-making takes place in the presence of irreversibility, uncertainty and the existence of timing options. The ‘new’ deprival value rules for an asset differ from the ‘conventional’ ones in that present value less the value of the option to reinvest in the asset appears in the ‘new’ rules wherever present value appears in the ‘conventional’ rules. Examples are provided which suggest that ‘new’ and ‘conventional’ deprival value rules can differ materially. A further result is that accounting rates of return can be developed using the ‘new’ deprival value rules that are, in principle, useful in the detection of monopoly profits. Nonetheless, in practice such use requires a level of information that renders the result superfluous in the sense that the provision of replacement cost balance sheet data, combined with the level of information needed, is sufficient to reveal the presence of monopoly profits directly.

Indirect cost in economic evaluation: the opportunity cost of unpaid inputs.

Unpaid time represents a potentially significant input into the health production function. The paper sets out the basis for valuation of time inputs consistent with the notion of opportunity cost. Such analysis requires consideration of whether time displaced in the production of health involves lost work or lost leisure. Furthermore, because valuation of opportunity cost requires the consistent treatment of costs and benefits, the study also considers the valuation of outputs. The basis for valuing the shadow price of work time is examined by firstly assuming perfect competition. The analysis then considers the presence of monopoly and monopsony in product markets and income and sales taxes. The basis for valuing the shadow price of leisure ("leisure' being all uses of time except paid employment) is restricted to an examination of methods previously used to value unpaid housework. The two methods examined are the replacement cost and the opportunity cost method. As the methods are not equivalent, the circumstances where each is appropriate vary depending on whether the output lost in producing health is replaced. Although not set out as the primary focus of the paper, the issues surrounding the valuation of outputs generated by non-market and quasi-market activity are examined. In particular, where activities such as informal care result in indirect utility to the carers (and patients) themselves, it is likely the full market wage provides a lower bound estimate of the value of marginal benefit. Finally the paper provides a practical approach to examining opportunity cost of unpaid inputs consistent with the concepts set out in preceding sections.

Industrial policy and national welfare in the presence of monopoly

The effect on national welfare of technical progress in different sectors are investigated in the presence of monopoly. Technical progress in the monopoly sector always benefits a country even if it increases the markup rate of the monopolist and enlarges the monopoly sector. Technical progress in a competitive sector can be less beneficial than that in the monopoly sector. It can even reduce welfare though it lowers the markup rate of the monopolist. Welfare implications of production subsidies and tariffs are also examined in this context.

The Non‐Equivalence of Tariffs and Quotas: An Extension

Casas and Choi (1985) suggest that a quota imposed exactly at the free trade level of imports could affect domestic prices and quantities in the presence of monopoly. They state (pp. 56–57): “An interesting corollary of this analysis is that an import quota set equal to the free trade volume of imports will be ineffective (i.e. non‐binding) but not redundant when the import competing industry is monopolised. In particular, such a quota would result in a higher domestic price and lower domestic output and consumption than under free trade.” This note extends the discussion in Casas and Choi by showing that an import quota may not be redundant even if it is set at a level greater than the free trade volume of imports. This possibility is shown to arise in both the small country and large country cases.

Discriminating Monopoly and International Trade

The theory of discriminating monopoly, although well developed along partial equilibrium lines, has been neglected in the pure theory of international trade. In this paper we examine the effects of a domestic monopolist engaging in price discrimination between national markets in the context of a general equilibrium framework. First, we compare a competitive trade equilibrium with a trade equilibrium characterised by the presence of a simple domestic monopolist. We then compare this latter equilibrium with the various possible equilibria that can arise when the monopolist is given the opportunity to engage in international price discrimination. In contrast to other studies which have explored in general equilibrium systems the impact of monopoly on trade flows, we examine income distributional effects that result from the presence of monopoly.' Welfare effects are also considered. Our model is a standard 2 x 2 x 2 trade model with, however, two additional restrictions. That is, we assume two economies, each of which is capable of producing two commodities directly with two factors under constant returns. Although total factor supplies are insensitive to changes in remuneration, factors do move frictionlessly between industries in a given economy in response to higher returns. We also impose the following two restrictions on the model. First, we assume that individuals in the home economy, including the monopolist, have identical and homogeneous utility functions. Second, individuals in the home economy, other than the monopolist who is assumed not to possess quantities of either factor, possess identical endowments of both factors. The former assumption permits us to draw a community indifference map for the home economy that is independent of the distribution of income and also to make comparisons between the equilibria that result from different market structures.2 The latter assumption enables us to discern the corresponding changes in the real incomes of the factor owners. Since we assume throughout the analysis that perfect competition prevails in the foreign economy, the above restrictions on utility functions and factor ownership need not apply to it. We merely require here that, for whatever

Quantitative restrictions in international trade under monopoly

This paper discusses the implications of quantitative restrictions in international trade for the terms of trade, domestic price ratio and outputs in the presence of monopoly in the domestic import-competing industry in a general equilibrium model. It is shown that a change in quotas has the same effects on the terms of trade and domestic price ratio under monopoly as under competition. Furthermore, the price-output relationship associated with a change in quota under monopoly may become perverse even though the production possibilities frontier is assumed to be strictly concave to the origin. The paper also derives the optimal and revenue maximizing quotas. It is demostrated that under monopoly, unlike under competition, the optimal and revenue maximizing quotas cannot be ranked uniquely.

The ranking of alternative tariff and quota policies in the presence of domestic monopoly

Bhagwati demonstrated the nonequivalence between tariffs and quotas in the presence of monopoly. This paper also assumes domestic production to be monopolized and shows that giving import licenses or tariff revenues to the domestic producer may raise or lower the welfare cost of protection and the price paid by consumers from the price under other tariff and quota arrangements which maintain the same market share for the domestic producer. However, if the monopolist realizes that commercial policy is an instrument used to maximize the policymaker's welfare function, instead of being a goal in itself, the equivalence of tariffs and quotas re-emerges.

Domestic Distortions, Tariffs, and the Theory of Optimum Subsidy: Some Further Results

Bhagwati and Ramaswami (1963) showed that if there is a distortion, the Paretian first-best policy is to intervene with a tax (subsidy) at the point at which the distortion occurs. Hence a domestic tax-cum-subsidy with respect to production would be first-best optimal when there was a domestic distortion (defined as the divergence between domestic prices and the marginal rate of transformation in domestic production) just as a tariff policy would be first-best optimal under monopoly power in trade (which involves a foreign distortion). An important corollary, for the case of a distortionary wage differential, is that while a tax-cum-subsidy policy with respect to factor use would be first-best optimal. the second-best optimal policy would be a domestic production tax-cum-subsidy rather than a tariff policy. While these central results are valid, Kemp and Negishi (1969) have correctly argued that two subsidiary propositions of Bhagwati and Ramaswami (1963) are false. These are (1) that no tariff (export subsidy) may exist which is superior to free trade in the presence of a domestic distortion, and (2) that no production tax-cum-subsidy may yield greater welfare than nonintervention when the nation has monopoly power. We can demonstrate, however, that the Kemp-Negishi results are, in fact, special cases of the first of the following two theorems in the theory of second-best, which we shall prove: Theorem 1.-If under laissez faire two of the variables DRS, DRT, and FRT are equal while the third has a different value, and the policy measure that will secure equal values of the three variables cannot be applied, some

The Social Optimum in the presence of Monopoly and Taxation

The Social Optimum in the presence of Monopoly and Taxation