Microeconomics,, 16th Canadian Edition

Figure 12-6 The Allocative Efficiency of Perfect Competition Allocative efficiency occurs at the level of output where the sum o ...

Notice that if output is only there is no consumer or producer surplus earned on the units between and Thus, the areas 1 and 2 i ...

Figure 12-7 The Deadweight Loss of Monopoly follows that the lower monopoly output must result in a smaller total of consumer an ...

Monopoly restricts output and reduces total surplus, thereby imposing a deadweight loss on society. If this market were perfectl ...

Allocative Efficiency and Market Failure We have seen that perfect competition is allocatively efficient and that monopoly and o ...

A simple example illustrates the problem. Markets for most agricultural commodities are highly competitive, with many small prod ...

12.2 Economic Regulation to Promote Efficiency Monopolies, cartels, and price-fixing agreements among oligopolists, whether expl ...

extraction of fossil fuels and the harvesting of forests within their provincial boundaries, and charge royalties (a share of re ...

Regulation of Natural Monopolies The clearest case for public intervention arises with a natural monopoly —an industry in which ...

notable exceptions, private ownership with regulation has been the preferred alternative. Whether the government owns or merely ...

Figure 12-8 Pricing Policies for Natural Monopolies Figure 12-8 illustrates a natural monopoly and shows that the firm’s LRAC cu ...

A natural monopoly has falling long-run average costs; marginal-cost pricing leads to losses, whereas average-cost pricing leads ...

Two-Part Tariff One pricing policy that permits the natural monopoly to cover its costs is to allow it to charge a two-part ta ...

For a natural monopoly with falling average costs, a policy of average-cost pricing will not result in allocative efficiency bec ...

benefit by having a larger amount of fixed capital allocated to producing this good. A government-owned natural monopoly may be ...

activity highly competitive. Canada Post still has a legislated monopoly over delivery of first-class mail, but this segment of ...

wind and solar “farms” producing electricity and selling it into the grid. These technological changes have led to the realizati ...

find it difficult to correctly draw a diagram like Figure 12-8. In the absence of accurate data, regulators have tended to judge ...

Regulation of Oligopolies Governments have also intervened in industries that were oligopolies (rather than natural monopolies), ...

Oligopolies and Innovation During the twentieth century and into the present, new products and production methods have followed ...