A Monopoly Classroom Experiment

Abstract

The author uses a simple classroom experiment to develop the economic model of monopoly. As a pedagogical tool, the experiment introduces students to the nature of the monopoly problem and motivates them to think of the associated efficiency issues as a divergence between private benefits and social contributions. As a test of economic principles, the experiment highlights the role of information and fairness ideals in determining economic outcomes.

Key Words:

• classroom experiment
• fairness
• information
• monopoly

Additional information

Notes on contributors

Robert J. Oxoby

Robert J. Oxoby is an assistant professor of economics at the University of Calgary. The experiments were performed while the author was a lecturer at Santa Clara University. The author thanks Louis Makowski and two anonymous referees for their suggestions.