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There are various implications of the monopoly model; many of which lead to criticisms of monopoly on issues of both technical /allocative efficiency.  The prices and output verified in the monopoly are not consistent with allocative efficiency criteria.  In monopoly there are so much resources allocated to production of this product, for which we receive too little output as illustrated by comparison with the competitive solution, the dotted line .Accordingly, because of the barriers to entry, the price for this product is too high - as allocatively inefficient.

 

Microeconomics, Economics

  • Category:- Microeconomics
  • Reference No.:- M9538759

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