General Information

MONOPOLY
A monopoly exists when a specific person or enterprise is the only supplier of a particular
commodity. This contrasts with a monopsony, which relates to a single entity’s control of a
market to purchase a good or service.

5 Definition

A monopoly is a business that is the only provider of a good or

service. That gives it a tremendous competitive advantage over
any other company that tries to provide a similar product.

10 Some companies become monopolies through vertical

integration. They control the entire supply chain, from
production to retail. Others use horizontal integration. They
buy up competitors until they are the only ones left.
Picture 1
Some, like utilities, enjoy government regulations that award
15them a market. Governments do this to ensure electricity production and delivery. That is

because it cannot tolerate the disruptions that come from free market forces. [ CITATION
Tom10 \l 1033 ]

4 Reasons of why they’re bad for the economy

Monopolies restrict Free Entry to market free trade, preventing the market from setting
20prices. Here are the following effects.

Since monopolies are the only provider, they can set any price they choose. That is known as
price fixing. They can do this regardless demand because they know the consumer has no
choice.

Not only can monopolies raise prices, but they can also supply inferior products.

25Monopolies lose any incentive to innovate. They have no need to provide

“new and improved” products.

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 Detailed Information
Monopolies create inflation. Since they can set any price they want, they will raise costs to
consumers. [ CITATION Bob12 \l 1033 ]

Net Digial Advertising

90
World net digital advertising revenues, $bn

80

70

60
Google
50 Facebook
Yahoo
40 Microsoft
30 Other

20

10

0
2008 2009 2010 2011 2012 2013 2014
Axis Title

Chart 1

5 Are Monopolies ever good?

Sometimes a monopoly is necessary. It ensures consistent delivery of a product or service
that has very go up-front cost.

No close
substitutes

Non-price Barriers to
competition entry

Monopoly

Price
Single Seller
marker

Chart 2

10

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 General Information
Monopolies in the United States of America
Monopolies in the US are not illegal. But Sherman Anti-Trust Act prevents them from using
their power to gain advantages. Congress enacted it in 1890 when the monopolies were
Trust. A Group of companies formed trust to fix prices low enough, to drive competitors out
5of business.

Price, Supply and Demand

A monopoly’s potential to raise prices indefinitely is its most critical
detriment to consumers. Because it has no industry competition, a
monopoly’s price is the market price and demand is market demand.
10 Even at high prices, customers will not be able to substitute the
good or services with a more affordable alternative. [ CITATION
Gar15 \l 1033 ]
Picture 2

Competitive Market Monopoly

Consumer Surplus A+B+E A
Produces surplus C+D+F B+C+D
Total Surplus A+B+C+D+E+F A+B+C+D
15Table 1

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Content

MONOPOLY 1
5Definition 1
4 Reasons of why they’re bad for the economy 1
Are Monopolies ever good? 2
Monopolies in the United States of America 3
Price, Supply and Demand 3
10Content 4
Bibliography 4
Pictures and Tables 5
Index 5

15 Bibliography
Bob G., N. T. (2012). Impact of monopolies.

Garry G., M. F. (2015). How to eliminate monopoly. New York.

Tom D., J. K. (2010). Business Monopoly.

20
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 General Information

Pictures and Tables

Picture 1 1
Picture 2 3
Y

5Chart 1 2
Chart 2 2
Table 1 3

10

Index
4 Reasons of why they’re bad for the economy..........................................................................................1
Definition.................................................................................................................................................1, 4
MONOPOLY.................................................................................................................................................1
15Price, Supply and Demand...........................................................................................................................3

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 Detailed Information

DearMrs. Qoridze!

I am pleased to invite you to the conference – “Monopoly in Georgia”.

The Conference will be held in Caucasus University.

5Time: Mrs.

Date: 03.06.2017

Thank you in advance!

Sincerely,

Ani Kheladze