This note demonstrates that whether the market is competitive or monopolistic need not be the result of ideology, political power or non-convexity of the technology. The answer can be determined by a government that maximizes the extracted resources from the alternative market structures. Our claim is illustrated by assuming that demand and supply are linear functions and that the government can extract the same share of the producers' profit under the alternative market structures. This share can be extracted from the actual producers or from the potential producers who take part in the contest to get a license to produce.
- Extraction norm
- Market conditions