monopoly_solver: Monopoly Profit Maximization

In Recon: Computational Tools for Economics

Description

This function numerically finds the profit-maximizing output for a monopolist with linear and non-linear cost and demand curves. For guaranteed existence of feasible solution (in which both price and output are positive), a linear demand curve might be necessary.

Usage

monopoly_solver(cost = c(0, 1, 0), demand = c(0, -1, 0), q0 = 0)

Arguments

cost	a vector of cost curve coefficients, which must be in order: intercept of the cost function, linear term's parameter of the cost function and quadratic term's parameter of the cost function
demand	a vector of demand curve coefficients, which must be in order: intercept of inverse demand function, linear coefficient, secon degree coefficient
q0	Initial guess for monopolist's output. Defaults to 0. Strongly advise not to set this parameter unless you are very aware of what you're doing.

Value

A list with market price, output, profits, markup, profitrate.

Author(s)

Pedro Cavalcante Oliveira, Department of Economics, Fluminense Federal University [e-mail]

Examples

c = c(50, 3, 1)
p = c(500, -8, -1)
monopoly_solver(cost = c, demand = p)

Recon documentation built on July 30, 2019, 9:03 a.m.