Thus, this allows X-inefficiency to occur In competitive markets, firms are continually under pressure from rivals. This increases costs, but not output. This is a rent-seeking expenditure Dynamic Efficiency Dynamic efficiency considers whether monopolists are more likely to develop more efficient techniques over time than competitive firms. There is little or no technological progress in a purely competitive market because there are no economic profits, which are a large incentive to produce new technology. As a result, firms do not develop new technology.
Monopolies can develop new technology without the fear of competitors.
The original purchaser cannot resell product or service Consequences 1. Monopolists that practice price discrimination get more profit 2. Price-discriminating Monopolists produce more output When a monopolist lowers the price, the reduced price applies only to additional unit sold and not to prior units. Hence, price and marginal revenue are equal. Therefore, the demand curve and marginal revenue curves will coincide.