Abstract
Monopoly power evokes rent seeking aimed at supplanting an incumbent monopolist as well as preemptive rent seeking by incumbents concerned with deterring entry of potential competitors. Using an illustrative example where preemptive rent seeking takes the form of excess capacity, this note makes the point that the relation between the value of resources expended in the two types of rent-seeking activity determines whether exposure of an incumbent monopolist to the discipline of potential competition reduces the social cost of monopoly power.
| Original language | English |
|---|---|
| Pages (from-to) | 277-281 |
| Number of pages | 5 |
| Journal | International Journal of Industrial Organization |
| Volume | 2 |
| Issue number | 3 |
| DOIs | |
| State | Published - Sep 1984 |