In comparison to competitive firms, monopolies do not maximize the sum of producer and consumer surplus and thus create deadweight loss.

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Monopolies have the ability to restrict output and charge higher prices, which results in a reduction of consumer surplus (the benefit consumers receive from paying less than they are willing to pay). The monopolist's profits, however, increase as a result of charging higher prices. This decrease in consumer surplus and increase in producer surplus (the benefit producers receive from selling at a higher price than they are willing to sell) creates deadweight loss, which is the loss of overall economic efficiency in terms of maximizing the total surplus (producer and consumer surplus combined). Therefore, monopolies do not maximize the sum of producer and consumer surplus, unlike competitive firms.

In Comparison to Competitive Firms, Monopolies Do Not Maximize the Sum