Inheriting a Rembrandt: A Rare Case of a Monopoly
We inherited several art works, including a Rembrandt etching—a portrait of an old man. Is it worth anything?? An art appraiser/detective hunted down its story. The print itself is new—pulled on highest-quality paper in the 1990s from Rembrandt’s plates. Apparently no prints were made in most of the 20th century. In the 1990s the plate’s owner pulled a small number, but none since, and none planned.
The owner has a monopoly on the plate and understands revenue maximization (there are essentially no variable costs): Pull just enough prints to have sufficient quantity to drive the price elasticity of demand to unity, but no more than that. Not only does his strategy gain him the most revenue, but it keeps the price of our print up in case we decide to sell it. This is a rare case where I benefit from monopoly!