The social costs monopoly and regulation political economy

• Demonstrate the ability to use and apply with some confidence, standard algebraic, statistical and diagrammatic representations of relevant models;

• Demonstrate the ability to critically assess and use microeconomic principles and concepts.

Answer:

Empirical study of social inefficiency of monopoly 

Evaluation of welfare cost under monopoly

The column 1 of the table represents estimated profit of the selected USA industries for a period of 5 years. Column 2 represents the profit that could have been earned if the industries got average profit instead of monopoly profit, Column 4 finally computed the welfare cost from divergence of socially efficient resource allocation (Jahantigh et al. 2015) The paper finally concluded that for the 37 selected USA industries, welfare loss from monopoly for a period between 1924 and 1929 was nearly 8 percent of the national income.

Harberger, A.C., 1995. Monopoly and resource allocation. In Essential Readings in Economics (pp. 77-90). Palgrave, London.

Jahantigh, F., Tash, S., Nabi, M. and Pahlavani, M., 2015. Evaluation of Social Cost of Monopoly in Iranian Industries: Leibenstein Approach. Iranian Journal of Economic Studies, 4(1), pp.1-26.