RENT-SEEKING FIRMS, CONSUMER GROUPS, AND THE SOCIAL COSTS OF MONOPOLY

Authors

  • Kyung Hwan Baik

    1. Associate Professor, Department of Economics, Sung Kyun Kwan University, Seoul 110–745, South Korea, Phone 82–2–760-0432, Fax 82–2–744–5717 E-mail Khbaik@yurim.skku.ac.kr
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    • *I am grateful to Jacques Crémer, Laura Baldwin, Scott Masten, Richard Milam, Tim Perri, Gary Shelley, Gyu Ho Wang, two anonymous referees, and seminar participants at Appalachian State University, Sung Kyun Kwan University, and Kyung Hee University for their helpful comments and suggestions. This research was supported by a 1993 summer research grant of the Department of Economics at Appalachian State University. Earlier versions of this paper were presented at the Sixty-Fourth Annual Conference of the Southern Economic Association, Orlando, Fla., November 1994 and the 1995 Annual Conference of the Korean Econometric Society, Seoul, Korea, December 1995.


Abstract

Do consumers' consumer-surplus (CS)–defending activities increase the social costs of monopoly compared to when consumers are inactive? Given just one rent-seeking firm, consumers ' CS-defending activities generally increase the social costs of monopoly, but given two or more rent-seeking firms, such activities generally reduce the social costs. (JEL D72, L12)

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