In most models,the large number of bankers makes the industry competitive.Bankers lend and borrow at the same interest rate so as to make a zero profit.However,as we examine domestic market,the industry operates in a pattern much more similar to the monopoly case.In the following model,we examine how a monopoly bank makes positive profit while giving rise to rent-seeking behavior and non-governmental financing. I Setups In reality,individuals,except for very wealthy ones,can hardly invest in multiple businesses.The business involves risk.The rate of return obtained is as follows. People have diminishing marginal utility of consumption.U'(c) ＞0;U"(c) ＜0. Ⅱ Monopoly bank Without intermediation,people use private debt to invest in companies.The expected utility of consumption when old is E(U).
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