To "B" or Not to "B": A Welfare Analysis of Breaking Up Monopolies in an Endogenous Growth Model
November 1, 2000
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Summary
This paper studies the welfare consequences of a government regulation that forces a patented equipment to be supplied by a number of independent producers. On the one hand, such a regulation hurts the value of a patent and therefore reduces activities in the R&D sector. On the other hand, the enhanced competition for the equipment improves efficiency in the manufacturing sector. Should monopolies protected by intellectual property rights be broken up? The answer is “no” in a Romer-type growth model, but there is sufficient reason to believe that the answer could be “yes” in a model advocated by Jones (1995).
Subject: Economic sectors, Financial services, Human capital, Labor, Manufacturing, Real interest rates
Keywords: Cobb-Douglas production function, Competition Policy, government regulation, Growth, Human capital, Manufacturing, monopoly price distortion, production function, R&D, Real interest rates, Romer model, welfare analysis, welfare cost, welfare implication, welfare point of view, WP
Pages:
18
Volume:
2000
DOI:
Issue:
189
Series:
Working Paper No. 2000/189
Stock No:
WPIEA1892000
ISBN:
9781451859607
ISSN:
1018-5941
