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In the context of Principles of Microeconomics-II, the distinction between a public monopoly and a private monopolist lies primarily in their ownership structure, objective functions, pricing strategies, and welfare considerations. These two types of monopolies operate under very different institutional and economic frameworks which influence their behavior in the market. --- ### Public Monopoly vs Private Monopolist 1. Ownership and Control: * Public Monopoly is owned and operated by the government. Examples include public utilities such as railways, electricity boards, or postal services. * Private Monopolist, on the other hand, is owned by individuals or corporate entities seeking to maximize profits. It may arise due to patents, control over resources, or barriers to entry. 2. Objective Function: * The primary objective of a public monopoly is social welfare maximization or provision of essential goods/services at an affordable price. It may also aim to ensure universal access, quality, and infrastructure development. * A private monopolist aims to maximize profits by equating marginal cost (MC) with marginal revenue (MR) and charging a price based on the demand curve. 3. Pricing Policy: * A public monopoly may set prices equal to marginal cost or average cost to ensure that the good is accessible to consumers and that there is no underconsumption. Sometimes, pricing is set below cost, and losses are covered by government subsidies. * A private monopolist typically sets a price above marginal cost, leading to deadweight loss and allocative inefficiency. The firm restricts output to raise price and earn supernormal profits. 4. Efficiency and Welfare: * Public monopolies may focus on allocative efficiency and equity, even if it means foregoing profits. * Private monopolists tend to result in allocative inefficiency as they underproduce and overcharge relative to the socially optimal level. ______ ______ _________ _________ ___ _________ _____ _________ _____.
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