Technology Adoption and Welfare Under a Monopoly: An Illustration of Microeconomic Policy Analysis

David Hennessy

Staff General Research Papers Archive from Iowa State University, Department of Economics

Abstract: Conventional classroom analysis of technology adoption in a monopoly neglects some important situations. A more comprehensive analysis provides the instructor with opportunities to present some critical economic concepts. By permitting intersecting cost functions, one can show why innovations may be adopted, whether adoption increases welfare, and what relationship exists between quantity, welfare, and adoption. A graph can be used to illustrate the importance of quantity in determining consumer welfare and to illustrate how private and social welfare diverge in a monopoly. A further insight allows comparison of graphical and mathematical approaches to economic analysis.

Date: 1998-04-01
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Published in Journal of Economic Education, Spring 1998, vol. 29, pp. 111-117

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Journal Article: Technology Adoption and Welfare under a Monopoly: An Illustration of Microeconomic Policy Analysis (1998)
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