📖 垄断与完全竞争比较

Economics

I. Lesson Focus

This lesson compares the equilibrium outcomes, efficiency, and welfare implications of perfect competition and monopoly. Candidates must be able to calculate and interpret consumer surplus (CS), producer surplus (PS), deadweight loss (DWL), and recognize the conditions under which each market structure achieves or fails to achieve allocative and productive efficiency.

II. The Problem

In a country the mobile-phone market was once served by dozens of firms selling nearly identical products at prices close to marginal cost, earning only a normal return. After one firm acquired patents and created insurmountable entry barriers, it became the sole supplier. Prices rose sharply while output fell. Consumers complained that phones were more expensive and new models harder to obtain. Regulators must determine whether the change in market structure has reduced total social welfare. This lesson systematically contrasts price, output, efficiency, and surplus under perfect competition versus monopoly and shows how to quantify the welfare loss using surplus analysis.

III. Characteristics and Equilibrium in Perfect Competition

A perfectly competitive market requires four conditions: 1. Many buyers and sellers, none of whom can influence market price (price takers); 2. Homogeneous products; 3. Perfect information; 4. Free entry and exit with no barriers.

In the short run, firms produce where $P = MR = MC$. Economic profit exists if $P > ATC$; losses occur if $P < ATC$. In the long run, positive economic profit attracts entry, shifting supply rightward until $P = MR = MC = ATC$ (long-run equilibrium) and economic profit is zero. At this point both productive efficiency ($P = MC$) and allocative efficiency ($P = MB = MC$) are achieved. Consumer surplus and producer surplus are maximized, total surplus (TS) is maximized, and deadweight loss is zero.

IV. Characteristics and Equilibrium in Monopoly

Monopoly is characterized by: 1. A single seller; 2. No close substitutes; 3. High barriers to entry (patents, control of key resources, government franchise, or natural monopoly); 4. The firm is a price maker facing a downward-sloping demand curve, so $P > MR$.

The marginal-revenue curve lies below the demand curve and has twice the slope of a linear demand curve. The firm maximizes profit where $MR = MC$, but sets price on the demand curve above that quantity. Compared with perfect competition, monopoly produces less output ($Q_m < Q_c$) at a higher price ($P_m > P_c$). Because of entry barriers the monopolist can earn positive economic profit in the long run.

V. Social-Welfare Analysis: Consumer Surplus, Producer Surplus, and Deadweight Loss

Welfare is measured by the areas under the demand and marginal-cost curves.

• Under perfect competition the equilibrium is where demand intersects the MC (supply) curve. CS is the triangle above price and below demand; PS is the triangle below price and above MC; total surplus $TS = CS + PS$ is maximized.
• Under monopoly the firm sets $MR = MC$, reads price from the demand curve, and restricts output. CS shrinks dramatically. Although PS rises because of the higher price, the increase in PS is smaller than the reduction in CS. The difference is deadweight loss (DWL)—the loss of total surplus on units that would have been traded under competition but are not produced under monopoly.

The DWL triangle lies between $Q_m$ and $Q_c$, bounded by the demand and MC curves. Monopoly creates allocative inefficiency ($P > MC$). In addition, resources may be wasted on rent-seeking activities that further reduce social welfare.

VI. Long-Run Comparison of Perfect Competition and Monopoly

• Output: monopoly output is lower.
• Price: monopoly price is higher.
• Economic profit: zero under competition; positive under monopoly because of barriers.
• X-inefficiency: lack of competitive pressure may cause the monopolist’s actual costs to exceed the lowest possible ATC.
• Innovation: monopoly may have greater incentive to innovate because of sustained profit (Schumpeter hypothesis), but may also innovate less because of lack of competitive pressure. CFA Level I focuses primarily on static inefficiency; dynamic efficiency is usually not emphasized.

Worked Cases

Case 1: Linear Demand Equilibrium Calculation

Market demand is $P = 120 - 2Q$; industry MC (supply) under perfect competition is $P = 20 + 2Q$.

Perfect-competition equilibrium:
$120 - 2Q = 20 + 2Q \Rightarrow Q_c = 25$, $P_c = 70$.

Monopoly equilibrium:
$MR = 120 - 4Q$. Set $MR = MC$: $120 - 4Q = 20 + 2Q \Rightarrow Q_m = 16.67$, $P_m = 86.67$.

CS under competition = $\frac{1}{2} \times (120-70) \times 25 = 625$.
CS under monopoly ≈ $\frac{1}{2} \times (120-86.67) \times 16.67 ≈ 277.8$.
Change in CS ≈ –347.2.
PS under competition = 625. PS under monopoly ≈ $(86.67-53.33) \times 16.67 ≈ 555.6$.
DWL = $\frac{1}{2} \times (86.67-53.33) \times (25-16.67) ≈ 138.9$.

Case 2: Regulatory Dilemma in Natural Monopoly

A water utility has continuously declining ATC and is a natural monopoly. Marginal-cost pricing ($P=MC$) produces losses because $P < ATC$, requiring government subsidy. Average-cost pricing ($P=ATC$) still results in $P > MC$ and some DWL. Regulators often use price-cap or rate-of-return regulation to balance efficiency and financial viability.

Case 3: Effect of Price Discrimination on Welfare

If a monopolist can practice perfect first-degree price discrimination (charging each consumer his or her maximum willingness to pay), the MR curve coincides with the demand curve, output rises to the competitive level $Q_c$, and DWL disappears. However, all consumer surplus is transferred to the producer. In practice, third-degree discrimination (student discounts, senior fares) increases output and reduces but does not eliminate DWL.

Traps

Key Formulas

• Perfect competition (long run): $P = MR = MC = ATC$
• Monopoly: $MR = MC$ and $P > MR$
• For linear demand $P = a - bQ$, $MR = a - 2bQ$
• Consumer surplus: $CS = \frac{1}{2} \times (P_{max} - P) \times Q$
• Deadweight loss: $DWL = \frac{1}{2} \times (P_m - MC_m) \times (Q_c - Q_m)$
• Total surplus: $TS = CS + PS$; maximized under perfect competition
• Lerner Index = $\frac{P - MC}{P}$; equals 0 in perfect competition, >0 under monopoly

Practice Questions

Q1. In the long-run equilibrium of a perfectly competitive market, which statement is correct?
A. $P > MC$
B. $P = MC = ATC$
C. Positive economic profit exists
D. Deadweight loss exists

Q2. Relative to a perfectly competitive market, a monopoly typically produces:
A. Higher output and lower price
B. Lower output and higher price
C. The same output but higher price
D. Higher output but the same price

Q3. A monopolist’s marginal-revenue curve:
A. Coincides with the demand curve
B. Lies above the demand curve
C. Lies below the demand curve and has twice its slope (linear case)
D. Coincides with the average-cost curve

Q4. Which of the following is NOT required for perfect competition?
A. Many buyers and sellers
B. Homogeneous products
C. Barriers to entry
D. Perfect information

Q5. A linear demand curve is $P = 100 - 4Q$ and marginal cost is constant at 20. The monopoly equilibrium output is:
A. 10
B. 12.5
C. 15
D. 20

Q6. The deadweight loss caused by monopoly represents:
A. A transfer of consumer surplus to producer surplus
B. The loss of total surplus on units that would have generated positive net benefit but are not produced
C. The monopolist’s rent-seeking expenditure
D. An increase in fixed cost

Q7. In a natural-monopoly industry, if regulators require marginal-cost pricing, the firm will most likely:
A. Earn supernormal profit
B. Incur large losses
C. Produce less than the competitive quantity
D. Eliminate X-inefficiency

Q8. Which statement about the long-run comparison of perfect competition and monopoly is incorrect?
A. Perfect competition earns zero economic profit in the long run
B. Monopoly can sustain positive economic profit in the long run
C. Monopoly always has stronger innovation incentives than competition
D. Monopoly usually exhibits X-inefficiency

Answers

Takeaways

• Perfect competition (long run): $P = MR = MC = ATC$, maximum total surplus, zero DWL.
• Monopoly: produces where $MR = MC$ but sets $P > MR = MC$, resulting in lower output, higher price, and positive DWL.
• Barriers allow monopoly to earn positive economic profit indefinitely.
• Natural monopoly requires regulation; marginal-cost pricing causes losses while average-cost pricing leaves residual DWL.
• Perfect price discrimination eliminates DWL but transfers all consumer surplus to the producer.
• Lerner Index measures monopoly power; it equals zero under perfect competition.