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Excess returns
Getting more money from an economic investment than you needed to justify investing. In perfect competition, the factors of production earn only normal returns, that is, the minimum amount of wages, profit, interest or rent needed to secure their use in the economic activity in question, rather than in an alternative. Excess returns can only be earned for more than a short period when there is market failure, especially monopoly, because otherwise the existence of excess returns would quickly attract competition, which would drive down returns until they were normal.
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- Part of Speech: noun
- Synonym(s):
- Blossary:
- Industry/Domain: Economy
- Category: Economics
- Company: The Economist
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