Suppose the government were to impose an annual license fee on a monopolist that just happened to be equal to its economic profits for a particular year. How would such a fee affect price and output? Do you think that such a fee would be appropriate? Why or why not?
Ответы
Ответ:
Imposing an annual license fee equal to the monopolist's economic profits would likely lead the monopolist to increase prices to pass on the cost to consumers. This could result in a reduction in output as the higher prices might decrease consumer demand. The monopolist, being the sole provider, has the power to influence both price and output.
Whether such a fee is appropriate depends on the broader economic and regulatory context. From an economic perspective, it could be argued that such a fee may help redistribute monopoly profits to the government, potentially funding public services or reducing the deadweight loss associated with monopoly pricing.
However, it's essential to consider potential unintended consequences, such as the impact on consumer welfare and innovation. If the fee leads to higher prices and reduced output, it may harm consumers. Additionally, it could discourage investment in research and development if the monopolist faces higher costs.
Ultimately, the appropriateness of such a fee depends on the specific circumstances, the goals of the government, and the potential trade-offs between capturing monopoly profits and maintaining a competitive and innovative market.