The Quiet Life of a Monopolist: The Efficiency Losses of Monopoly Reconsidered
Bibliographic record
Abstract
In this paper we reconsider the efficiency losses of monopoly by studying a monopolist’s incentives to control production costs. To do so, we construct a model where a firm’s total cost of production depends on output and the manager’s effort. Total cost increases with output but decreases with effort. We analyse two separate cases with regard to ownership and control: (1) the owner of the firm manages the firm; and (2) the owner hires a manager to operate the firm. We demonstrate that even in the case where the owner is the manager of the firm, the effort level exerted by the owner-manager of a monopoly is generally not first-best. The direction of the bias depends on the relationship between output and effort in the cost function. The monopolist exerts too little effort if output and effort are complements in the cost function. The reverse is true if output and effort are substitutes in the cost function. The separation of ownership and control exacerbates monopoly slackness when output and effort are complements in the cost function. If output and effort are substitutes, on the other hand, the separation of ownership and control offsets the over-supply of effort by the owner-manager of the monopoly.
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How this classification was reachedexpand
Full frame distilled prediction
Teacher imitationNot calibrated prevalence, not ground truth. Human validation pending. Learned from the 10,348 direct Codex labels and 10,348 direct Gemma labels. Candidate is the union of thresholded teacher heads; consensus is their intersection. These outputs are machine_predicted_unvalidated and are not human labels or direct frontier model labels.
Codex and Gemma teacher scores by category
| Category | Codex | Gemma |
|---|---|---|
| Metaresearch | 0.003 | 0.002 |
| Meta-epidemiology (narrow) | 0.000 | 0.000 |
| Meta-epidemiology (broad) | 0.001 | 0.001 |
| Bibliometrics | 0.001 | 0.000 |
| Science and technology studies | 0.000 | 0.001 |
| Scholarly communication | 0.000 | 0.000 |
| Open science | 0.002 | 0.001 |
| Research integrity | 0.000 | 0.001 |
| Insufficient payload (model declined to judge) | 0.000 | 0.000 |
Machine scores (provisional)
The two teacher heads of the student model, read on this work. A score orders the frame for review; it never asserts a category, and the validation status ships verbatim with every row.
Baseline scores from an immature model (maturity gate not passed, 7 training rounds). Scores rank; they never assert a category.
score_only:v0-immature-baseline · verbatim from the scoring run: score_only means the number may rank works, and no category label ships from itClassification
machine, unvalidatedMachine predicted; a candidate call from one teacher head, not a consensus.
How this classification was reached, model by model and score by score, is at the end of the page under "How this classification was reached".