The once-mighty Blockbuster video chain is now down to a single store, in Bend, Oregon. It appears to be the only video rental store in Bend, aside from those offering “adult” features. Does that make Blockbuster a monopoly?
It seems almost silly to ask if the last firm in a dying industry is a monopolist. But, it’s just as silly to ask if the first firm in an emerging industry is a monopolist. They’re silly questions because they focus on the monopoly itself, rather than the alternative—what if the firm, and therefore the industry—did not exist at all.
A recent post on CEPR’s Vox blog points out something very obvious, but often forgotten: “The deadweight loss from a monopolist’s not producing at all can be much greater than from charging too high a price.”
The figure below is from the post, by Michael Kremer, Christopher Snyder, and Albert Chen. With…
View original post 385 more words
Utopia, you are standing in it! 
Recent Comments