Theoretical Economics Letters > Vol.5 No.4, August 2015

Yuhki Hosoya¹, Soh Kaneko²

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

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.

Monopoly, Income Gap, Total Surplus

Hosoya, Y. and Kaneko, S. (2015) Welfare Improvement and the Extension of the Income Gap under Monopoly. Theoretical Economics Letters, 5, 590-597. doi: 10.4236/tel.2015.54069.