Explain the meaning of Monopoly with its features Economics

The absence of close substitutes makes the demand for monopolist products relatively inelastic. The demand is inelastic when it does not change much with a change in the price of the product. A pure monopoly is a single seller in a market or sector and high barriers to entry, such as significant startup costs. It concerns with the competition that would come from other undertakings which are not yet operating in the market but will enter it in the future. So, market shares may not be useful in accessing the competitive pressure that is exerted on an undertaking in this area.

The company used several methods to exercise this control over the market. In second degree price discrimination or quantity discrimination customers are charged different prices based on how much they buy. There is a single price schedule for all consumers but the prices vary depending on the quantity of the good bought.58 The theory of second degree price discrimination is a consumer is willing to buy only a certain quantity of a good at a given price. Price discrimination exists if a firm charges different prices from different consumers.

Public Monopolies

It arises when a monopolist has such significant market power that it can restrict its output while increasing the price above the competitive level without losing customers.83 This type is less concerned by the Commission than other types. L depends on factors like elasticity of demand, presence of competitors, extent of regulations, etc. The term monopoly is derived from the Greek word ‘Mono’ which means single and ‘poly’ which means seller. Monopoly is a market in which there is only one seller who controls the entire market supply for a product which has no close substitute. The companies that are the sole supplier of a product or service in the industry enjoy a monopoly.

#1 – Maximizes profits

1. Market definition may be difficult to measure but is important because if it is defined too narrowly, the undertaking may be more likely to be found dominant and if it is defined too broadly, the less likely that it will be found dominant.
2. Telkom is a semi-privatised, part state-owned South African telecommunications company.
3. The degree of product differentiation as registered in the strength of buyer preferences ranges from slight to fairly large, tending to be greatest among infrequently purchased consumer goods and “prestige goods,” particularly those purchased as gifts.
4. There is a single price schedule for all consumers but the prices vary depending on the quantity of the good bought.58 The theory of second degree price discrimination is a consumer is willing to buy only a certain quantity of a good at a given price.
5. Barriers to entry are low, and the competing companies differentiate themselves through pricing and marketing efforts.

Moreover, competitors are discouraged from entering the market often due to high initial costs. When it is said that the production of a certain commodity has become efficient, it means that the firm does not have to spend large amounts on the cost of production. After existing in the market for a considerable period of time, output can be generated at a larger scale with fewer input cost.

Explain the meaning of Monopoly with its features. – Economics

It is helpful to distinguish the related ideas of market conduct and market performance. Market conduct refers to the price and other market policies pursued by sellers, in terms both of their aims and of the way in which they coordinate their decisions and make them mutually compatible. Market performance refers to the end results of these policies—the relationship of selling price to costs, the size of output, the efficiency of production, progressiveness in techniques and products, and so forth. Multiple sellers in an industry sector with similar substitutes are defined as having monopolistic competition. Barriers to entry are low, and the competing companies differentiate themselves through pricing and marketing efforts. First, it is necessary to determine whether a company is dominant, or whether it behaves “to an appreciable extent independently of its competitors, customers, and ultimately its consumers.” Establishing dominance is a two-stage test.

Deutsche Telekom currently monopolizes high-speed VDSL broadband network.105 The Long Island Power Authority (LIPA) provided electric service to over 1.1 million customers in Nassau and Suffolk counties of New York, and the Rockaway Peninsula in Queens. The Strong Museum never stops hunting for new treasures, sometimes popping up at special toy auctions to grab important pieces. They check each new game for uninvited pests, give them proper homes in special materials, and document every detail before tucking them away safely.

Examples of possible/potential monopolies

Vending of common salt (sodium chloride) was historically a natural monopoly. Until recently, write the meaning of monopoly a combination of strong sunshine and low humidity or an extension of peat marshes was necessary for producing salt from the sea, the most plentiful source. Your favourite board game has come such a long way from Elizabeth Magie’s clever teaching tool! From helping soldiers escape in wartime to watching London’s property prices shoot through the roof, this little game has seen it all.

1. Market performance refers to the end results of these policies—the relationship of selling price to costs, the size of output, the efficiency of production, progressiveness in techniques and products, and so forth.
2. The demand is inelastic when it does not change much with a change in the price of the product.
3. Lower HHI indicates more competition, while a higher one indicates less or no competition (i.e., monopoly).
4. This implies that the difference between a firm and an industry ceases to exist in the case of a monopoly.
5. Such a barrier is generally measurable by the extent to which established sellers can persistently elevate their selling prices above minimal average costs without attracting new sellers.
6. The Strong Museum never stops hunting for new treasures, sometimes popping up at special toy auctions to grab important pieces.

The structure of a market is also affected by the extent to which those who buy from it prefer some products to others. In some industries the products are regarded as identical by their buyers—as, for example, basic farm crops. In others the products are differentiated in some way so that various buyers prefer various products.

High price discrimination implies more control of the monopolist over the prices. A monopoly is represented by a single seller who sets prices and controls the market. The high cost of entry into that market restricts other businesses from taking part.

It is generally assumed that a monopolist will choose a price that maximizes profits. A monopoly is a single seller or producer without direct competitors for its products or services due to its business practices. A monopoly can dictate price changes and create barriers that prevent competitors from entering the marketplace. As with collusive conduct, market shares are determined with reference to the particular market in which the company and product in question is sold. It does not in itself determine whether an undertaking is dominant but work as an indicator of the states of the existing competition within the market.