ECON 1201 Lecture Notes - Lecture 22: Monopoly Profit, Price Ceiling, Deadweight Loss
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You might be tempted to ask about the supply curve of a monopolist. Monopolist"s don"t have supply curves - since they control prices there is not set relationship between prices and quantity supplies. When a monopoly raises prices and lowers q, consumer surplus falls and deadweight loss is created. To avoid this, government policy attempts to prevent monopoly behavior. The government policies used to prevent or eliminate monopolies are known as antitrust policies. De beers diamond monopoly is unique: over the last century, most similar monopolies have been broken up. An american example: by 1878 john d. rockefeller"s standard oil controlled almost all u. s. oil refining. But in 1911 a court order broke the company into a number of smaller units, including the companies that later became exxon and mobil ( and merged in 1999 to become exxonmobil) Natural monopolies are a different story: they bring lower costs.
