Market Structure: Monopoly (Part III) PDF

MARKET STRUCTURE: MONOPOLY (PART III) IVY MARIEL T. MACA, LPT  What is Monopoly? The word mono means “single” or “one” and the prefix polein finds its roots in Greek, meaning “to sell”. Hence, the word monopoly literally translates to single seller. What is Monopoly? Monopoly is a ma...

MARKET STRUCTURE: MONOPOLY (PART III) IVY MARIEL T. MACA, LPT  What is Monopoly? The word mono means “single” or “one” and the prefix polein finds its roots in Greek, meaning “to sell”. Hence, the word monopoly literally translates to single seller. What is Monopoly? Monopoly is a market structure that consists of a single seller who has exclusive control over a commodity or service. What is Monopoly? A monopolistically competitive industry does not display productive and allocative efficiency in either the short run, when firms are making economic profits and losses, nor in the long run, when firms are earning zero profits.  What is Monopoly? Antitrust legislation is in place to restrict monopolies, ensuring that one business cannot control a market and use that control to exploit its customers. A monopoly displays characteristics that are different from other market structures. These characteristics are as follows: Single seller A single seller has total control over the production, and selling of a specific offering. This also means that the seller has no competition and holds the entire market share of the offering that it deals in. A monopoly displays characteristics that are different from other market structures. These characteristics are as follows: No close substitutes The monopolist produces a product or service that has no similar or close substitute. A monopoly displays characteristics that are different from other market structures. These characteristics are as follows: Barriers to entry In a monopoly market structure, new firms cannot enter the industry due to barriers like network externalities, patents and copyrights, brand loyalty, natural/geographical barriers etc. A monopoly displays characteristics that are different from other market structures. These characteristics are as follows: Price maker A monopolist has the power to charge any price for its product of service.  TYPES OF MONOPOL Y 01:Pure/ Absolute Monopoly Pure/Absolute Monopoly The monopolist controls the entire market supply for its product without facing any form of competition. This is possible because there is absolutely no close or remote substitute available in the market. 02:Natural Monopoly Natural Monopoly A natural monopolist enjoys or benefits from natural factors like locational advantages, locational reputation, natural talents and skill sets of the producers, etc. 03:Private Monopoly Private Monopoly A private monopoly is one that is owned by an individual or a group of individuals. These monopolies mainly aim for profits. 04:Public Monopoly Public Monopoly A public monopoly is one that is owned by the government. 05:Legal Monopoly Legal Monopoly Legal Monopoly arises due to government regulations that give exclusive rights and pri vileges to one firm. A legal monopolist enjoys government approved rights like trade mark, patent, copy right, etc. -Thanks-