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Question about state run monopolies? watch

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    Econplusdal in his video said state run monopolies can be dynamically efficient. I don't understand what they would do with profits? Does it go back to the government? If firms spend it on innovation, what's the poiny, they don't keep profits anyway?
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    (Original post by dont know it)
    Econplusdal in his video said state run monopolies can be dynamically efficient. I don't understand what they would do with profits? Does it go back to the government? If firms spend it on innovation, what's the poiny, they don't keep profits anyway?
    State run monopolies, theoretically at least, are run for the welfare of society instead of the profiteering of private shareholders. There's no inherent reason why it needs to be a non-profit because as you mention, there are innovations that they can spend on. These innovations are beneficial for it's consumers who can still benefit from a better product.

    Off the top of my head, I'd consider the Chinese High Speed Rail network for example. It's rolling stock is predominantly foreign in origin, from Germany, Japan and the like. The profits it makes from parts of the network has helped fund development of the "Fuxing Hao" series of rolling stock which have far higher levels of domestically developed components. This helps to reduce import and thus production costs of rolling stock in future and allows for quicker train sets, more comfortable ride/on-board experience etc. which are all things that keep the daily ridership happy.
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    (Original post by TeeEff)
    State run monopolies, theoretically at least, are run for the welfare of society instead of the profiteering of private shareholders. There's no inherent reason why it needs to be a non-profit because as you mention, there are innovations that they can spend on. These innovations are beneficial for it's consumers who can still benefit from a better product.

    Off the top of my head, I'd consider the Chinese High Speed Rail network for example. It's rolling stock is predominantly foreign in origin, from Germany, Japan and the like. The profits it makes from parts of the network has helped fund development of the "Fuxing Hao" series of rolling stock which have far higher levels of domestically developed components. This helps to reduce import and thus production costs of rolling stock in future and allows for quicker train sets, more comfortable ride/on-board experience etc. which are all things that keep the daily ridership happy.
    If they are run for the welfare of society, wouldn't they always charge where p=mc?
 
 
 
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