Are monopolies legal or illegal?

Tucson Electric Power Company

Southwest Gas Company

Qwest

All of these companies are monopolies--Natural Monopolies

The patent owner has the right to exclude others from making, selling, offering for sale, or importing into the U.S. the invention protected by the patent, unless they have the express permission of the patent holder to do so.

Patents last 20 years from the date of filing of the first patent application that includes the claimed invention. Patent lifespans used to be 17 years from the date of issuance, but that term was changed by the General Agreement on Tariffs and Trade (GATT) agreement in 1995.

Patent No. 1 on July 31, 1790, for an improvement "in the making Pot ash and Pearl ash by a new Apparatus and Process."

http://techweb.ceat.okstate.edu/ias/firstpatent.htm

It was essential for making soap and glass, dyeing fabrics, baking, and making saltpeter for gunpowder. Today its principal use is in fertilizers.

Traction wheels for a locomotive

1836http://www.nara.gov/publications/prologue/patent.gif

1836

: biz.howstuffworks.com/ gif/patent-shoe.gif

The shoes, patented in 1994 by Israel Siegel, are powered by the walking motion of the user. Each time you take a step, your heel works to activate the air-conditioner compressor and expander.How Patents Work

Rubik Cube online

http://www.calormen.com/TwistyPuzzles/PatentPics/US4409750.gif

By 1982, sales rose to such unprecedented levels that in the West, according to some calculations, one in every three households possessed at least one RUBIK's Cube.

The Cube's international fame and the export achievement became one of the contributing factors in the reform and liberalization of the Hungarian economy between 1981 and 1985 which finally led to the move from Communism to Capitalism.

http://www.rubiks.com/g/products/online.gif

http://www.studyabroad.com/content/portals/maps/hungary_map.gif

X

Good for the life of the author

plus 50 years

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http://cgi1.usatoday.com/life/_photos/2001-09-07-inside-michael-jackson.jpg

http://www.cnn.com/2000/WORLD/europe/08/15/britain.beatles/beatles.mccartney.jpg

http://www.analitica.com/bitblioteca/img/beatles.jpg

http://www.mjsite.com/young/babyface.jpg

http://nt.student.co.uk/music/images/michael-jackson.jpg

Jackson bought the publishing rights to 250 of the classic Beatles’songs in 1985.

He shocked the music world by outbidding Sir Paul McCartney and paying a reported $47 million for them

A trademark includes any word, name, symbol, or device, or any combination, used, or intended to be used, in commerce to identify and distinguish the goods of one manufacturer or seller from goods manufactured or sold by others, and to indicate the source of the goods. In short, a trademark is a brand name.

1. A single seller in the market.

2. The seller is a price searcher.

3. There are barriers to entry.

4. The seller is like any other seller in the market. He, she, or it will try to maximize profits.5. The single seller can operate inefficiently because there is no competition.

Q

0 1 2 3 4 5 6 7 8 910

P

24 23

2221201918171513

25

The only way a monopoly isable to sell more units of Q isby lowering its price.

Q

0 1 2 3 4 5 6 7 8 910

P

24 23

2221201918171513

25

You had to have knownthere was going to be a graph.

24

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25

0 1 2 3 4 5 6 7 8 9 10

D = P

Q

0 1 2 3 4 5 6 7 8 910

P

24 23

2221201918171513

25 24

23

22

21

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19

18

17

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15

25

0 1 2 3 4 5 6 7 8 9 10

D = P

What do you get whenyou multiply P x Q?

TR

024466684

100114126136135130

x =

Q

0 1 2 3 4 5 6 7 8 910

P

24 23

2221201918171513

25 24

23

22

21

20

19

18

17

16

15

25

0 1 2 3 4 5 6 7 8 9 10

D = P

TR

024466684

100114126136135130

In economics, we arenot as concerned about total as we are about

Marginal

What is theformula formarginal revenue?The change in TR /the change in Q

MR

> 24>>>>>>>>>

2220

1816141210-1-5

Q

0 1 2 3 4 5 6 7 8 910

P

24 23

2221201918171513

25 24

23

22

21

20

19

18

17

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15

25

0 1 2 3 4 5 6 7 8 9 10

D = P

TR

024466684

100114126136135130

MR

> 24>>>>>>>>>

2220

1816141210-1-5

Graph MR

MR

Q

0 1 2 3 4 5 6 7 8 910

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25

0 1 2 3 4 5 6 7 8 9 10

D = PMR

TC

405058657587

100115135160190

You’re probably wondering why I put a TC column if total isn’t all that important.

We “need”these numbers tofigure outMC and ATC.

Q

0 1 2 3 4 5 6 7 8 910

24

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0 1 2 3 4 5 6 7 8 9 10

D = PMR

TC

405058657587

100115135160190

What is the formulafor marginal cost?

The change in total costs / the change in Q

MC

>>>>>>>>>>

1087

101213

15202530

Q

0 1 2 3 4 5 6 7 8 910

24

23

22

21

20

19

18

17

16

15

25

0 1 2 3 4 5 6 7 8 9 10

D = P

MR

TC

405058657587

100115135160190

MC

>>>>>>>>>>

1087

101213

15202530

Graph MC MC

190

Q

0 1 2 3 4 5 6 7 8 910

24

23

22

21

20

1918

17

16

15

25

0 1 2 3 4 5 6 7 8 9 10

D = P

MR

TC

405058657587

100115135160

MC

>>>>>>>>>>

1087

101213

15202530

Graph MC MC

Amonopolistproduces whereMR = MC

and charges a price abovethis Q (6) onthe D curve

Q

0 1 2 3 4 5 6 7 8 910

P

24 23

2221201918171615

25

Q

0 1 2 3 4 5 6 7 8 910

24

23

22

21

20

19

18

17

16

15

25

0 1 2 3 4 5 6 7 8 9 10

D = P

MR

TC

405058657587

100115135160190

MC

>>>>>>>>>>

1087

101213

15202530

MCCan we figure out the ATC if we have the TC?

What isthe formula forATC?TC / Q

Q

0 1 2 3 4 5 6 7 8 910

24

23

22

21

20

19

18

17

16

15

25

0 1 2 3 4 5 6 7 8 9 10

D = P

MR

TC

40505865

7587

100115135160190

MCATC

502822

19171717171819

ATC

Graph ATC starting at the 4th unit to the 9th unit.

ATC = TC / Q

24

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19

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25

0 1 2 3 4 5 6 7 8 9 10

D = P

MR

MC

ATC

This monopolyseller produces6 units (MR = MC)and sells eachand every unitfor $19.

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0 1 2 3 4 5 6 7 8 9 10

D = P

MR

MC

ATC

Is this monopolyearning aneconomic profit,and economicloss, or justbreaking even?

Since the priceis above the ATCat the profit-maximizing Q of6 units, the firmis earning aneconomic profit.

24

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25

0 1 2 3 4 5 6 7 8 9 10

D = P

MR

MC

ATC

Economic Profitis equal to thearea, A, 19, B, C.

A

B

C

19

24

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19

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25

0 1 2 3 4 5 6 7 8 9 10

D = P

MR

MC

ATC

A

B

C

19

Since this firm isearning an economic profit,will there beentry into themarket place?NO! Since thisis a monopoly there will be no entry even though it is earningeconomic profits.

>When the preacher's car broke down on a country road,

>he walked to a nearby roadhouse to use the phone. After calling for a tow

>truck, he spotted his old friend, Harry, drunk and shabbily dressed at the

>bar. "What happened to you, Harry?" asked the good reverend. "You used to

>be rich." Harry told a sad tale of bad investments that had led to his

>downfall. "Go home," the preacher said. "Open your Bible at random,

>stick your finger on the page, and there will be God's answer." Some time

>later, the preacher bumped into Harry, who was wearing a Gucci suit,

>sporting a Rolex watch, and had just stepped out of a Mercedes. "Harry,"

>said the preacher, "I am glad to see things have really turned around for

>you." "Yes, preacher, and I owe it all to you," said Harry. "I opened my

>Bible, put my finger down on the page and there was the answer ... Chapter