产业组织理论课件：Lecture 4 Competition and Monopoly

1、产业组织理论Theory of Industrial Organization Lecture 4 Competition and Monopoly OutlineMajor types of marketEconomics of perfect competitionEconomics of monopolyMarket power and its measurementTypes of Market市场的类型按产品或服务供给方的集中程度分类完全竞争市场垄断竞争市场寡头垄断市场完全垄断市场买方垄断市场与买方垄断市场市场的类型市场类型厂商数目产品差别程度对价格控制的程度进出一个行业的难易程度接

2、近哪种市场情况完全竞争垄断竞争寡头垄断很多很多几个一个完全无差别有差别有差别或无差别唯一的产品，没有替代品没有有一些相当程度很大程度，但经常受到管制很容易比较容易比较困难很困难，几乎不可能一些农产品香烟、糖果钢铁、汽车公共事业，如水、电完全竞争市场的特征完全竞争市场具有以下五个特征：市场上有大量的买者和卖者每一厂商提供的产品都是完全同质的没有交易成本资源具有完全的流动性信息是完全的市场上有大量的买者和卖者相对于整个市场的总需求量和总供给量而言，任何一个买者的需求量和任何一个厂商的供给量都是微不足道的。一个买者买与不买，或者购买多少，以及一个卖者卖与不卖，或者卖多卖少，都不会对市场价格产生任何影

3、响价格接受者 ：完全竞争市场中的每一个消费者和厂商对市场价格没有任何控制力量，只能被动地接受既定的市场价格，称之为价格接受者每一厂商提供的产品都是完全同质的同质性意味着产品之间是可以完全替代的，使得消费者无法区分产品是哪家厂商生产的，或者说购买任意一家厂商的产品都是一样的在这种情况下，如果某一厂商将产品价格提高到市场价格之上，消费者会立刻到其他地方购买，导致顾客完全流失。当然，单个厂商总是可以按照既定的市场价格把自己的产品全部卖出去资源具有完全的流动性资源自由流动有两层含义：一是购买者能够很轻易地从一家厂商转向另外一家厂商，二是厂商可以在没有特殊成本发生的情况下进入或退出市场。这种特殊成本包括

4、新厂商进入市场或者在位厂商退出市场必须承担的成本在资源完全流动的条件下，资源可以及时地投入到有经济利润的生产中，并能够及时地从亏损的生产中退出来，而不必负担任何成本信息是完全的一方面，生产者了解产品生产方面的信息，包括投入要素价格、自身的生产函数、产品价格等消费者同样掌握着有关自身偏好、效用函数、产品价格等方面的信息。在完全信息条件下，厂商了解其他生产者都按照何种价格销售，因此不会抬高价格另一方面，消费者准确地了解在什么地方能够以市场价格购买到同质商品，出价也绝对不会高于市场价格 完全竞争模型的五个假设原子性假设，即市场上有许多厂商，每个厂商都很小，以至于其行为对其他厂商没有明显的影响产品同质

5、性假设，即不同企业生产的产品是一样的充分信息假设，即所有的参与者 知道所有厂商制定的价格机会均等假设，即任一个企业都能取得所有生产技术自由进出假设，即任何厂商都可自由进入或退出The Assumptions of Perfect CompetitionPerfect competition as modeled by economists is quite different from the everyday view of competition. Each firm in a perfectly competitive market recognizes that its effect

6、on the overall market is insignificantPerfectly competitive firms do not view other firms as rivals; they make business decisions without considering the actions or reactions of other firms in the industry. Each firm views the market price as independent of its own level of outputCharacteristics of

7、perfect competitionLarge number of buyers and sellers, A perfectly competitive market contains many buyers and sellers, each small relative to total purchases or salesHomogeneous product or identical product. Because consumers cannot distinguish one firms product from anothers, they are indifferent

8、about their supplierPerfect information. All economic agents (firms and consumers) have all of the information they need to make economic decisionsCharacteristics of perfect competitionNo transaction costs. Transaction costs are the costs of using the market, such as the costs of negotiating and mon

9、itoring a contract. In a perfectly competitive market, transaction costs are zero for both buyers and sellersFree entry and exit. Adjustments to changing market conditions require that resources enter or leave the industry. In a perfectly competitive market these adjustments occur without fi rms hav

10、ing to incur any special costs; there are no barriers to entry or exitCharacteristics of perfect competitionA perfectly competitive market ensure that firms and consumers are price takersConsumers are indifferent about their supplier, have perfect information about price, and incur no transaction co

11、sts in switching to a different sellerFirm can sell as much output as it wants at the going price. Therefore, buyers view the market price as beyond their control; they cannot find any firm willing to sell output at a price below the market priceThe Demand Curve Facing a Perfectly Competitive FirmA

12、perfectly competitive firm takes the equilibrium market price of $2 as fixed; it faces the horizontal and perfectly elastic demand curve shown as d. For a perfectly competitive firm, the demand curve is also equal to the marginal revenue curveThe Firms Supply CurveThe profit-maximizing rule tells a

13、firm to produce that quantity of output for which marginal revenue equals marginal costIn the special case of a firm in a perfectly competitive industry, marginal revenue always equals priceTo understand why, remember that a perfectly competitive firm can sell another unit of output without having t

14、o lower its price.The Firms Short Run Supply CurveA firm should produce in the short run if its total revenue is greater than or equal to its avoidable costs, defined earlier as the sum of variable costs and the recoverable part of fixed costsIn the short run, therefore, a profit-maximizing firm wil

15、l choose to produce some output as long as the revenue it gets from selling that outputits total revenue (TR) is greater than or equal to the costs of the variable inputs it must hire to produce that outputits VCThe Firms Short Run Supply CurveA profit-maximizing fi rm will produce some output in th

16、e short run as long as price is greater than or equal to average variable costThe point at which P = AVC is called the shutdown point . Because of the relationship between marginal and average, the point at which P = AVC = MC is the minimum point on the AVC curveA Perfectly Competitive Firms Short-R

17、un Supply CurveThe firms short-run supply curve is vertical at an output of zero for all market prices less than P0, the minimum of AVC. For prices above P0, the supply curve is identical to the firms short-run marginal cost curve, SRMC.The Firms Long Run Supply CurveIn the long run, all inputs are

18、variable and a firm will leave an industry if it is earning negative economic profits. In the long run, a profit-maximizing firm will produce only if total revenue is greater than or equal to total costsThe firms long-run supply curve is simply its marginal cost curve above the minimum point on the

19、long-run average total cost curveFor any price above the minimum point on the average total cost curve, the firm will earn positive economic profits. For any price below this minimum, the firm will leaveThe Market Supply Curve and EquilibriumThe short-run market supply curve is derived by choosing a

20、 price and adding up the quantities of output produced by each fi rm at that price. (Remember that the number of fi rms in the industry in the short run is fi xed.) Market equilibrium is the intersection of the market demand and market supply curves. At the equilibrium price, the quantity supplied b

21、y producers is equal to the quantity demanded by consumers.Short-Run Equilibrium for a Firm and the MarketIn panel (b), the market equilibrium price is p1In panel (a), a representative fi rm takes the market price, p1, as given and maximizes profi t by producing q1, where price equals marginal cost

22、In this case, price exceeds average total cost at q1, so the fi rm earns positive economic profi t of q1(p1 - ATC1), which equals the blue areaProperties of Competitive EquilibriumThe perfectly competitive model serves as a valuable reference point because of the desirable properties of long-run equ

23、ilibriumThe equilibrium resource allocation in a competitive economy is efficient, meaning that no possible reallocation of resources will make one market consumer or firm better off without hurting anotherAll mutual gains from trade have been achieved. One important type of efficiency concerns the

24、level of output being produced and purchasedProperties of Competitive EquilibriumEfficiency in the level of output, called allocative efficiency, requires that the marginal benefit of producing another unit of output equal its marginal costIn competitive equilibrium, price, a measure of the value a

25、consumer places on the last unit bought, equals the marginal cost to society of producing that last unitThis ensures that the socially optimal quantity of the good is produced Competitive equilibrium also exhibits efficiency in productionProperties of Competitive EquilibriumIn long-run equilibrium e

26、ach firm is producing at the minimum point on its long-run average cost curve. Output is produced using the least costly combination of inputs. Furthermore, high-cost firms will be forced to exit the marketA third characteristic of competitive equilibrium is that each perfectly competitive firm earn

27、s zero economic profits in long-run equilibrium. Therefore, productive resources receive only their opportunity cost and nothing moreLong-Run Equilibrium for a Firm and the MarketIn long-run equilibrium, no firm can make either positive or negative economic profits; price must equal average cost so

28、that economic profi ts equal zeroThe long-run equilibrium for the firm occurs at the minimum of LRAC where LRAC = LRMC = SRAC = SRMC. P* is the long-run equilibrium price; each firm produces q*. At this price and output level, there is no incentive for entry into or exit from this market垄断性竞争市场的特点大量

29、厂商：有许多厂商争夺相同的顾客群体，每个厂商的市场份额都不大。产品差异：不同的厂商生产的产品是有差异的，但相互之间具有较高的替代性。自由进入：厂商可以自由进入或退出该行业。化妆品、服装、食品、餐馆、影视娱乐、家用小电器等很多行业都属于垄断竞争市场。寡头垄断市场的特点市场当中只有少数几个厂商，每个厂商生产同质或者有差异的产品。厂商之间存在相互依存性，一个厂商在采取行动时必须要考虑其他厂商的反应。这是寡头垄断市场最突出的特点。几种市场结构的比较各种市场结构中厂商行为和市场均衡的特点 企业数量产品类型一家企业垄断寡头垄断几家企业有差别垄断竞争完全竞争无差别市场结构的分类很多家企业几种市场结构的比较从

30、社会的角度看，这四种市场结构孰优孰劣呢？对这个问题无法做一个确定性的回答。 完全竞争市场能够实现社会福利的最大化垄断则会降低社会的福利垄断竞争和寡头垄断对社会福利的影响则不太容易判断，尤其是寡头垄断 Economics of perfect competition竞争的涵义当我们在日常用语中说到 “竞争”这个词的时候，我们更多的时候用其来指个体参与的一项活动有若干竞争对手目标是战胜竞争对手，取得胜利经济学中的竞争特指市场竞争，是市场参与者为实现自身的经济利益和既定目标而不断进行的角逐过程卖方与卖方的竞争买方与买方的竞争不同类型市场中的竞争完全竞争市场有数量众多的买方和卖方，故没有人拥有 (可以

31、影响竞争结构的)“市场势力”(market power) 。市场过程的参与者关于可能的各种选择拥有完全信息卖方提供的是同质性商品。资源的流动与配置没有粘性。参与经济行为的人都是价格接受者在完全竞争市场上，产品的价格是由整个市场的产品供给和需求决定的，也被称作受价者市场在完全竞争市场，厂商只需制定产量决策市场需求曲线是水平线单个厂商不能影响价格，是受价者每个厂商的产量相对于市场供给量而言，微不足道每个厂商改变产量都不会影响产品的市场价格 不同类型市场中的竞争 在完全竞争市场，单个厂商面临的需求曲线是水平的，即完全弹性。价格P产量 Q完全竞争市场的厂商产量选择 在完全竞争市场，单个厂商会按照P=M

32、C来选择自己的产量（利润最大化产量）价格P产量 QQ*p*完全竞争市场的厂商产量选择 完全竞争模型是经济学家分析市场作用的一个参照系但是，这一模型存在一些问题：忽略了厂商的作用只描述了市场调节个体选择的结果，而没有说明调节的过程。调节的过程才是现实的经济生活。教材8.6完全竞争市场的厂商产量选择 不同类型市场中的竞争垄断性竞争市场的主要特征厂商数量多但规模相对比较小不同厂商的产品存在差异，因而需求曲线向下倾斜厂商进出不受限制，资源可以在行业间转移厂商数目众多，每个厂商都要在一定程度上接受市场价格，但又都可对市场施加一定程度的影响市场上的每个经济人的决策对其他人的影响不大，彼此相互独立行动，互不

33、依存不同类型市场中的竞争产品差别是造成厂商之间垄断竞争的根源，即在同样的价格下，如果购买者对某家厂商的产品表现出特殊的爱好时，就说该厂商的产品与同行业内其他厂商的产品具有差别。只要同行业产品之间的差别不是大到完全不能相互替代，厂商之间就会相互竞争，产品的相互替代性是厂商竞争的根源产品差别可以表现为：质量差别、功用差别、非实质性差别（如包装、商标、广告等引起的印象差别），以及销售条件差别不同类型市场中的竞争寡头垄断市场的主要特点市场上的厂商只有少数几个（当厂商为两个时，叫双头垄断），每个厂商在市场中都具有举足轻重的地位，对其产品价格具有相当的影响力任一厂商进行决策时，必须把竞争者的反应考虑在内，

34、因而既不是价格的制定者，更不是价格的接受者，而是价格的寻求者产品同质，彼此依存的程度很高，叫纯寡头；产品有差别，彼此依存关系较低，叫差别寡头不同类型市场中的竞争在寡头垄断市场上，市场价格高于边际成本，同时价格高于最低平均成本。由于寡头市场存在竞争，有时竞争还比较激烈，因而其效率比垄断市场要高寡头市场上往往存在着产品差异从而满足消费者的不同偏好寡头企业规模较大，便于大量使用先进的生产技术，而激烈的竞争又使厂商加速产品和技术革新，提高效率在位厂商：市场中已有的厂商。在位厂商不喜欢竞争竞争意味着有更多生产同类产品的厂商进入替代品增多会提高需求弹性，降低在位厂商的市场势力，从而降低其利润为限制竞争，在

35、位厂商通常有两种做法合谋求助政府，让政府出台相应政策在位厂商限制竞争的做法合谋：厂商之间达成协议，共同采取某种行为，以提高市场势力，增加利润。维持价格分享市场 例子2000年，中国彩电厂商价格联盟房地产业的默契式价格联盟合谋现实中，厂商之间的合谋组织很难保持协调厂商之间活动的交易成本太高成员厂商为增加自己私利，普遍存在违背合谋协议的动机，如私下降价反垄断法禁止在位厂商更渴望也更愿意，政府出台相应的政策，对竞争进行法律限制合谋Economics of monopoly市场垄断的涵义垄断：一种产品只有一个卖家，或市场的全部或部分份额由一家企业所占有，企业有确定市场价格的权利该定义非常含混，取决与对

36、厂商出售产品的不同定义：如果商品的定义足够宽泛，那么没有一种产品是只由一家厂商出售的。如：中国的铁路市场，产品界定为铁路运输，还是交通运输如果商品的定义足够狭窄，则每个厂商都是垄断者，因为没有两家厂商出售完全相同的产品考察厂商出售产品的需求价格弹性。如果弹性很小，则厂商生产的产品很难被替代品，厂商就可以把价格定得很高，涨价时仍能保持大部分业务。如果弹性很大，则厂商生产的产品很容易被替代，厂商拥有的提高价格的能力很小界定垄断的方法厂商具有的将价格提高到边际成本之上的能力被称作市场势力，与需求价格弹性成反比垄断：厂商出售产品的需求价格弹性为0 ，拥有的市场势力无限大严格意义上的垄断市场很少见。不过

37、，只要厂商面临的需求曲线不是完全弹性的（向右下方倾斜），厂商就具有一定的市场势力，能够提高价格，是觅价者PQPQQ完全弹性的需求完全无弹性的需求PQP弹性大的需求弹性小的需求常见情况形成市场垄断的原因边际成本造成垄断关于市场垄断的形成，一个很重要的原因是因为边际成本降低，就是说客户越多、产量越大、成本越低但是随着技术的进步，这种垄断可能被打破。以往的电力传输之所以依赖于大电网，就是因为它的规模经济，大电厂的发电成本低。但现在出现了很多先进的小型发电技术（例如小燃气轮机发电），它的发电成本低、损耗少，使用灵活方便，这样一来，原来的大发电厂的垄断优势就被逐渐地削弱了形成市场垄断的原因技术专利造成垄

38、断在技术或者制度的演进中人们一旦选择了某种技术发展和演进的道路，就很可能沿着这条道路走下去，而不容易跳转到另一条道路上去如微软的Windows软件，最先占据了个人电脑操作系统的主流市场，以后就很难换成别的软件。作为应用软件的开发商，不得不和它兼容。而作为用户，过去使用了微软，为了使用更多的应用软件，也就不得不继续依赖于它形成市场垄断的原因财政补贴造成垄断如中国很多地方的政府补贴居民用电，造成电价过低。不少人买了电采暖装置，利用补贴电价以得到好处，由此造成了很大程度的资源浪费。能源补贴还会造成环境破坏为了优化资源配置和减少环境污染，政府不但应该取消对能源的价格补贴，还要想法设法将企业的外部成本内

39、部化，也就是要对能源使用征环境税形成市场垄断的原因规模经济：当大规模生产出现长期平均成本降低时，个别厂商会扩大生产规模，增加产量，提高在行业总产量中的比重，产业中的竞争者减少行业进入壁垒：阻碍新厂商进入某个行业的各种因素：法律限制、进入成本、广告、产品差别控制了生产某种商品的全部资源或基本资源的供给政府特许甄别甄别:通过提供一系列不同价格与质量水平的消费组合,销售者能够按照消费者愿意支付的价格来区分消费者平装书、散装月饼、飞机的经济仓等有些时候，企业为了实行价格歧视，故意降低某些现有产品的质量，即生产受损产品。虽然受损产品的价格低，但其生产成本有时要比正常产品成本高纯粹捆绑：消费者必须购买捆绑

40、产品混合捆绑：消费者可以选择整体购买组合，或单独购买微软的office定价：Excel，Word， Powerpoint，Acess，Microsoft MailMicrosoft Mail 为80$, 其余495$(2060$)整套软件的组合价格: 750$捆绑销售Market power and its measurementMarket Power市场势力（Market Power），也称市场权力。市场势力是指卖方（seller）或买方（buyer）不适当地影响商品价格的能力。对于卖方来说，市场势力也就是卖方的垄断倾向市场势力是市场失灵的一种比较普遍的现象。它是指一个市场参与者或市场参与

41、者的小集团不适当地影响市场价格的能力市场势力可以使市场不能有效配置资源，导致市场无效率，因为它会使价格和数量背离供求平衡Market Power市场势力的表现形式主要有行业垄断、自然垄断、垄断竞争、价格生产联盟等企业的角度看，拥有市场势力意味着能使其获得更多的利润对消费者而言，企业拥有市场势力意味着不得不从自己的钱包中掏出更多的钱从社会角度看，市场势力的存在意味着社会资源使用的低效Market Power市场势力具有两种表现形式：卖方垄断力(monopoly power）和买方垄断力(monopsony power）生产者对产品价格的影响力是卖方垄断力，消费者对产品价格的影响力是买方垄断力。现

42、实世界中，每个生产者和消费者实际上都具有一定的市场势力任何有能力将产品价格定在边际成本，即完全竞争的价格，之上的厂商，都被认为是有市场势力或垄断力（monopoly)的Market Power按照厂商拥有市场势力的时间长短，可将其分为长期市场势力和短期市场势力按照厂商行为的主动性，将市场势力分为防御性市场势力和进攻性市场势力将市场势力按照时间长短进行划分是有重要意义的。短期意味着限于2-3年之内，厂商可能拥有影响其他厂商和市场参与者的能力Market Power市场势力实际上是对垄断程度的测量，但是，拥有市场势力并不意味着厂商就一定能够运用这种势力从市场中获利，因为在仅仅拥有短期市场势力的条件

43、下，市场势力的运用是受到极大限制的拥有短期市场势力的厂商只能谨慎地运用市场势力，防止引发众多新厂商的进入的局面拥有短期市场势力的一个额外的好处是厂商能够具有保持市场的稳定能力和在一些短暂的情况做出有利于自己的决策Market Power将市场势力分为防御性市场势力和进攻性市场势力。对于理解市场势力与市场绩效的关系有重要意义防御性市场势力是指厂商面对其他厂商采取进攻行为时所拥有的抵御这种进攻的能力,而且这种能力必须是可信的、确实存在的。进攻性市场势力是指厂商具有主动扩大市场份额或者获得额外收益能力。但是拥有进攻性市场势力，并不意味着市场势力是长期的企业市场势力的衡量需求价格弹性估计法 需求价格弹

44、性反映了需求量变化对价格变化的敏感程度。如果需求量变化超过价格变化，即计算结果大于1，就表明前者对后者的敏感程度强，弹性大；反之亦然当需求量不变的情况下，提高价格，需求的价格弹性就会越小，等于1直至小于1，到最后成为无弹性，这时企业的市场势力最大。企业拥有的市场势力与需求价格弹性呈反向相关，即需求价格弹性越小，市场势力水平越高企业市场势力的衡量勒纳指数估计法 勒纳指数是指价格高出边际成本的比率，即：勒纳指数=（价格-边际成本)/价格勒纳指数：企业市场势力的衡量勒纳指数与企业拥有的市场势力呈正向相关，并与其所处于的市场结构类型有关，即处于完全竞争市场中的企业市场势力最小，依次为垄断竞争市场、寡头

45、垄断市场和完全垄断市场，呈递增趋势完全垄断的负面效应就是出现市场失灵，因此，政府“反垄断”法派上用场勒纳指数表明，即使是垄断厂商对价格也只有有限的控制力企业市场势力的衡量需求交叉弹性估计法 需求交叉弹性反映一种商品需求量对另一种商品价格的敏感程度如果两种商品是可替代的，那么需求交叉弹性为正。商品交叉弹性越高，替代性越强，生产这两种商品的企业拥有的市场势力就越弱它一般用于反托拉斯案例中，以帮助判断对于某特定企业的商品而言，是否市场中存在该商品的替代品Introduction to Welfare Economicsconsumer surplus and producer surplusCons

46、umer surplus is the difference between the maximum amount consumers are willing to pay for a good and the amount they actually payProducer surplus is the difference between the market price the producer receives for selling a unit of output and its reservation supply price, the lowest price for whic

47、h fi rms would be willing to produceConsumer and Producer SurplusAt the competitive price of $40 and output of 50:A consumer surplus equal to triangle ABCProducer surplus at this price and output level is the area of triangle BCDThe Economics of MonopolyA monopoly is the sole producer of a good for

48、which there are no close substitutes. Thus, a monopolist is the industry and faces the market demand curve for its productThat demand curve, like any market demand curve, slopes downward, and the monopolist can operate at any point along that market demand curveIt can choose a high price and sell a

49、relatively small quantity of output, or it can choose a lower price and sell more outputThe Relationship Between MR and PriceA monopolist, like any profit-maximizing firm, will choose to produce the quantity for which marginal revenue equals marginal costUnlike a perfectly competitive firm, marginal

50、 revenue for a monopolist does not equal price. Because a monopolist faces the downward-sloping market demand curve, the only way it can sell an additional unit of output is by lowering the price on all units. *Although it gains revenue from the additional unit of output, it loses revenue on those u

51、nits previously sold at a higher priceChanges in a Monopolists Total Revenue Resulting from a Price CutIf output increases by one unit from Q1 to Q1 + 1, the monopoly gains area Q1CB(Q1 + 1) in revenue, which equals P2 Q = P2 However, on the units produced up to Q1, the monopolist loses revenue equa

52、l to area P1ACP2, which equals Q1 P. Marginal revenue is the sum of these two areas, or P2+Q1P. Because P 0, this is clearly less than P2; marginal revenue for a monopolist is less than priceProfit-Maximizing Price and Quantity for a MonopolistThe monopolist maximizes profit by producing the quantit

53、y of output for which marginal revenue equals marginal cost, QM The profit-maximizing price, PM, is found from the market demand curveThis graph also illustrates the fact that the marginal revenue curve corresponding to a linear demand curve has the same vertical intercept as the demand curve but is

54、 twice as steeply slopedThe Degree of Market PowerAny firm that has the ability to set price above marginal cost, the perfectly competitive equilibrium price, is said to have market power or monopoly powerThe monopolist will choose the profit-maximizing pricequantity combination on the market demand

55、 curve, we do not know how high the monopoly price will be in relation to marginal costHow much can the monopolist raise price above marginal cost? What constraints does it face on raising price signifi cantly above marginal cost?The Lerner IndexThe Lerner Index , or the monopoly markup is an index

56、that can measure the degree of market powerThe Lerner Index indicates that even a monopolist has only limited control over priceEffect of Price Elasticity of Demand on the Gap Between Profit-Maximizing Price and Marginal CostThe monopolists ability to raise price above marginal cost depends on its e

57、lasticity of demandIf the market demand curve is relatively elastic (a), the monopolists profit-maximizing price is relatively close to its marginal cost. A less elastic demand curve (b), results in a relatively larger gap between price and marginal costWelfare ComparisonWhy do economists worry abou

58、t market power? The major concern is that monopoly misallocates resources by producing the “wrong” amount of a good, where price does not equal marginal cost. In other words, monopoly is always allocatively inefficientIt is very important to understand that this problem arises because the monopoly p

59、rice is greater than the marginal cost of the goodWelfare Loss Due to MonopolyUnder perfect competition, output is QPC and price is PPC; consumer surplus is area ABC and producer surplus is area CBDThe monopolist produces QM priced at PM; consumer surplus is AEF and producer surplus is EFGDThe deadweight loss resulting from monopoly is area FBGCautionsWhy policymakers might not want to attack firms with market power as aggressively as theory might suggestAllowing