Quotulatiousness

December 14, 2015

The Monopoly Markup

Filed under: Economics — Tags: , , , , — Nicholas @ 04:00

Published on 18 Mar 2015

Ever wonder why pharmaceuticals are so expensive? In this video, we show how low elasticity of demand results in monopoly markups. This is especially the case with goods that involve the “you can’t take it with you” effect (for example, people with serious medical conditions are relatively insensitive to the price of life-saving drugs) and the “other people’s money” effect (if third parties pay for the medicine, people are less sensitive to price).

Related posts:

  1. Michael Pinkus: Apathetic Ontario and the LCBO monopoly
  2. Maximizing Profit under Monopoly
  3. The end of a monopoly
  4. Deregulating a “natural monopoly”
  5. The natural lifecycle of a “monopoly”

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