16
Patents and Monopolies.
§
Creation of “artificial”
property rights.
§
Right to exclude others
from competition.
§
Monopoly transfers
wealth from consumers
to producers (PS)
§
Merchants willing to pay
monarch up to PS for
right to monopoly.
§
Dead-weight efficiency
loss (DWL).
MC, AC
$
MR
D
Q
m
P
m
P
c
Q
c
CS
PS
DWL
DWL loss represents
foregone gains from trade.
