What kinds of policy interventions by the government

Reference no: EM131167549

The duration of monopoly positions Consider the model of section 6.2, in which the monopolized intermediate goods became competitive with the probability p per unit of time.

a. How do differences in p affect the steady-state properties of the model?

b. What kinds of policy interventions by the government would lead to a first-best outcome in this model? In particular, is it possible to reach the first best solely by subsidizing purchases of the monopolized intermediate goods?

c. If the government can influence p through various instruments (such as antitrust enforcement and patent protection), what are the model's implications about desirable policies?

Reference no: EM131167549

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