Monopoly and competition in addictive markets

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dc.contributor.authorMurray, Sean-
dc.description.abstractThis paper models monopoly markets on which demand is addictive as defined by Stigler and Becker; and hence dynamic. It is shown that the monopolists' equilibrium is unique and stable and the time path taken to reach it is also unique. The comparative statics and comparative dynamics of these markets are analysed. It is proved formally that the harmfully (beneficially) addictive monopolist will produce to the left (right) of the equality between marginal revenue and marginal cost, and that the latter may produce where marginal revenue is negative. The model is applied to policy problems in drug-related crime in both long and short runs under monopoly than under competition. The reverse holds true under demand-directed policies. Demand-directed polices cause less crime than supply-directed policies whether competition or monopoly obtains.en
dc.description.externalNotesA hard copy is available in UCD Library at GEN 330.08 IR/UNIen
dc.format.extent499895 bytes-
dc.publisherUniversity College Dublin. School of Economicsen
dc.relation.ispartofseriesUCD Centre for Economic Research Working Paper Seriesen
dc.relation.ispartofseriesNo. 20en
dc.subject.lcshMonopolistic competition--Mathematical modelsen
dc.subject.lcshDemand (Economic theory)en
dc.subject.lcshSubstance abuse--Econometric modelsen
dc.titleMonopoly and competition in addictive marketsen
dc.typeWorking Paperen
dc.internal.availabilityFull text availableen
dc.statusNot peer revieweden
item.fulltextWith Fulltext-
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