On three welfare properties of monopoly in bilateral exchange

B-Tier
Journal: Journal of Mathematical Economics
Year: 2025
Volume: 119
Issue: C

Authors (4)

Busetto, Francesca (not in RePEc) Codognato, Giulio (not in RePEc) Ghosal, Sayantan (University of Glasgow) Turchet, Damiano (not in RePEc)

Score contribution per author:

0.503 = (α=2.01 / 4 authors) × 1.0x B-tier

α: calibrated so average coauthorship-adjusted count equals average raw count

Abstract

We establish three welfare properties of the model of monopoly introduced by Busetto et al. (2023), where one commodity is held only by the monopolist, represented as an atom, and the other is held only by small traders, represented by an atomless part. First, we prove that a monopoly allocation is Pareto optimal if and only if it is an allocation which corresponds to an efficiency equilibrium. Second, we reformulate a paradox, due to Shitovitz (1997), to show that for any monopoly allocation there is another core allocation, distinct from both a monopoly allocation or a Walras allocation, which is, utility-wise, advantageous for the monopolist and nonadvantageous for the small traders. Finally, we prove a theorem which shows that monopoly is advantageous for the monopolist and nonadvantageous for each trader in the atomless part with respect to all Walras allocations which are not monopoly allocations.

Technical Details

RePEc Handle
repec:eee:mateco:v:119:y:2025:i:c:s0304406825000643
Journal Field
Theory
Author Count
4
Added to Database
2026-01-25