Deadweight Loss from Market Power

Visualizing welfare effects of monopoly pricing in antitrust analysis

0 20 40 60 80 100 $0 $20 $40 $60 $80 $100 Quantity Price DemandMC P=$42, Q=80
Consumer Surplus
Producer Surplus
Wealth Transfer
Deadweight Loss
Market Structure
Welfare Analysis
$1920
Consumer Surplus
$1280
Producer Surplus
$0
Wealth Transfer
$0
Deadweight Loss

Perfect Competition

At competitive equilibrium, price equals marginal cost (P = MC). Total surplus is maximized with no deadweight loss. This represents the efficient baseline for antitrust analysis.