| Sumario: | Having a monopoly that is not owned domestically affects a country's income redistribution policies. Assume the government uses lump‐sum taxes to redistribute but cannot regulate the monopolist's price. In many relevant circumstances, a social planner would not equate social marginal utilities of income across individuals. Thus, using aggregate welfare functions as the preferences of a single representative consumer is valid only under restrictive circumstances. The monopolist always prefers to set price before the social planner chooses transfers, while the social planner may not have a first‐mover advantage. Under endogenous timing of their decisions, the government never moves before the monopolist.
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