Welfare Improvement and the Extension of the Income Gap under Monopoly

Yuhki Hosoya¹, Soh Kaneko²

¹Department of Economics, Kanto-Gakuin University, Yokohama, Japan.
²Faculty of Economics, Keio University, Tokyo, Japan.

DOI: 10.4236/tel.[phone]                

Abstract

This study constructs a model of a monopoly where investors are also actors, and shows that, in contrast to traditional models, this model admits the welfare improvement caused by monopoly. This study also reveals that if a huge income gap exists in the initial stage, then monopoly exacerbates the expansion of the income gap caused by market trades. Moreover, we show that this exacerbation occurs in general situations under some additional (but natural) assumptions.

Keywords

Monopoly, Income Gap, Total Surplus

Conflicts of Interest

The authors declare no conflicts of interest.

References

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[2]	Mas-Colell, A., Whinston, M.D. and Green, J.R. (1995) Microeconomic Theory. Oxford University Press, Oxford.
[3]	Okuno, M. (2008) Microeconomics. Tokyo University Press, Tokyo.
[4]	Varian, H.R. (1992) Microeconomic Analysis. W. W. Norton and Company, New York.