The optimal suppression of a low-cost technology by a durable-good monopoly

Article Abstract:

A monopoly of durable goods would use a technology having the lowest average cost at low production levels given two technologies known to consumers. It is possible for a monopoly to initially use an inferior technology to raise profits if consumers are aware only of technologies being used. The monopoly keeps the new and efficient technology in secret and uses it later. An inferior technology may be used in both cases. However, switching of technology may only happen if consumers have no thorough knowledge about all technologies.

Research, Technology, Durable goods

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Monopoly and soft budget constraint

Article Abstract:

Companies can purposely resort to unprofitable management schemes to be able to receive state subsidies. This may happen when a firm perceives government economic programs to be bent on intervening for unprofitable monopolies which have not been able to recoup social production overflow. A company may react through induced low yields by investing below its normal capacity. As a consequence however, this practice leads to welfare losses which are even more constricting than the paralyzing cost of monopoly prices.

Regulation, Licensing, and Inspection of Miscellaneous Commercial Sectors, Business Aid & Regulation-State, Industry regulations, Subsidies, Business assistance

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On the use of ceiling-price commitments by monopolists

Article Abstract:

A common selling practice is to set a ceiling or asking price from which the buyer can bargain for reductions. The buyer incurs a surplus from the transaction when his willingness to pay is higher than the ceiling price. A game model of a monopolist seller of a single asset is examined in two situations where customers arrive one at a time and do not directly compete with one another and where customers learn about their willingness to pay by incurring inspection costs.

Analysis, Selling, Incentives (Business)

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