Monopoly | Chapter 15 - Principles of Microeconomics (9th Edition)

Описание: Chapter 15 of Principles of Microeconomics (9th Edition) by N. Gregory Mankiw analyzes the behavior, welfare effects, and policy implications of monopolies. Unlike competitive firms, which are price takers, a monopoly is a price maker, setting prices above marginal cost due to its exclusive market power. Monopolies arise from barriers to entry, which include ownership of key resources (e.g., DeBeers and diamonds), government-created monopolies through patents and copyrights (pharmaceutical drugs, books, software), and natural monopolies, where economies of scale make single-firm production most efficient (utilities, bridges, water systems).

The chapter then explores monopoly decision-making. A monopolist maximizes profit where marginal revenue (MR) = marginal cost (MC), but because MR is always below price on a downward-sloping demand curve, the monopoly price exceeds MC, reducing output below the socially efficient level. This pricing strategy generates monopoly profit, illustrated by markets like Microsoft Windows or patented drugs, and highlights why monopolies have no true supply curve. The welfare cost of monopoly comes from deadweight loss, as higher prices exclude consumers who value the good above cost but below the monopoly price, similar to the distortions caused by taxes.

Mankiw also discusses price discrimination, where monopolists charge different customers different prices based on willingness to pay. Examples include airline tickets, movie discounts, coupons, financial aid, and hardcover vs. paperback pricing. Perfect price discrimination could eliminate deadweight loss by serving all customers willing to pay at least marginal cost, though all surplus accrues to producers. In reality, imperfect price discrimination has mixed welfare effects, always raising producer profit but variably affecting efficiency and consumer surplus.

The chapter concludes with public policy toward monopolies. Governments may use antitrust laws (Sherman and Clayton Acts) to prevent harmful mergers or break up firms, regulation to control prices in natural monopolies, public ownership of essential services, or sometimes choose to do nothing, acknowledging that the costs of regulation may outweigh monopoly inefficiencies. The key takeaway is that while monopoly power is widespread in degrees, true monopolies are rare, and their inefficiencies—deadweight loss, reduced output, higher prices—must be weighed against innovation incentives, economies of scale, and potential welfare gains from certain forms of price discrimination.

📘 Read full blog summaries for every chapter:
https://lastminutelecture.com

📘 Have a book recommendation? Submit your suggestion here:
https://forms.gle/y7vQQ6WHoNgKeJmh8

Thank you for being a part of our little Last Minute Lecture family!









































Principles of Microeconomics Chapter 15 summary, Monopoly explained, N. Gregory Mankiw textbook study guide, barriers to entry monopoly resources, government-created monopolies patents and copyrights, natural monopolies utilities bridges, profit maximization monopoly MR = MC, monopoly vs competition pricing, deadweight loss from monopoly power, welfare cost of monopoly microeconomics, price discrimination airline tickets movie discounts, coupons financial aid economics, perfect vs imperfect price discrimination examples, antitrust laws Sherman Clayton Acts, Microsoft monopoly case study, DeBeers diamond monopoly, regulation of natural monopolies utilities, public ownership vs private monopolies, efficiency vs equity monopoly policy, monopoly profit vs consumer surplus, Mankiw economics monopoly chapter