Efficiency Outcomes for Monopoly

Allocative Efficiency will not naturally exist in Monopoly. The profit maximizing firm sets MR = MC leading to a price above and quantity below those where P = MC.

Productive Efficiency would only occur in Monopoly by very unlikely chance if MR = ATC where MR = MC. In general, productive efficiency will not occur and no market forces will encourage this outcome.

Technical Efficiency is not guaranteed by market forces, however the profit motive should lead the firm to at least attempt to achieve this outcome.

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