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Monopoly rents are earned by firms that are able to restrict supply and/or increase prices without fear of attracting competitors. The difference between price and long-run marginal cost is a measure of the economic rent, and the sum of the difference across all units sold is the total monopoly rent. This can be higher if price discrimination is possible. There are a number of ways in which monopoly rents can be secured, such as government grant of monopoly, through patents, through (illegal) anticompetitive conduct or collusion. In practice, monopoly rents are often hard to identify and measure.
KeywordsPrice Discrimination Advanced Economy Government Grant Economic Rent Perfect Competition
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