Monopoly is a market structure characterized by a single seller that dominates the industry. Key characteristics of a monopoly include having a single seller, offering a unique product without close substitutes, and erecting barriers to entry that prevent competition. Examples of monopolies include local utility companies that are granted exclusive rights to provide essential services like electricity or water in a given geographic area, creating a monopoly without alternative providers for consumers. As the sole provider, a monopolist can restrict output and charge prices above costs without risk of losing market share to competitors.
Monopoly is a market structure characterized by a single seller that dominates the industry. Key characteristics of a monopoly include having a single seller, offering a unique product without close substitutes, and erecting barriers to entry that prevent competition. Examples of monopolies include local utility companies that are granted exclusive rights to provide essential services like electricity or water in a given geographic area, creating a monopoly without alternative providers for consumers. As the sole provider, a monopolist can restrict output and charge prices above costs without risk of losing market share to competitors.
Monopoly is a market structure characterized by a single seller that dominates the industry. Key characteristics of a monopoly include having a single seller, offering a unique product without close substitutes, and erecting barriers to entry that prevent competition. Examples of monopolies include local utility companies that are granted exclusive rights to provide essential services like electricity or water in a given geographic area, creating a monopoly without alternative providers for consumers. As the sole provider, a monopolist can restrict output and charge prices above costs without risk of losing market share to competitors.
‘Poly’. ‘Mono’ means single and ‘Poly’ means seller. Thus, monopoly is a firm that is the sole producer of a good or services in the `relevant market. For instance, most local utility companies are the sole providers of electricity and natural gas in a given city. Some towns have a single gasoline station or movie theater that serves the entire local market. All of these constitute local monopolies. When there is a single provider of a good or services in a market, there is tendency for the seller to capitalize on the monopoly position by restricting output and charging a price above marginal cost. Because there are no other firms in the market , consumers cannot switch to another producer in the face of higher prices. Consequently , consumers either buy some of the product at the higher price or go without it. In monopolistic markets, there is extreme concentration and the Rothschild index is unity. Monopoly , a market structure characterized by a single seller dominating the industry , has significant implications for market dynamics and economics outcomes. CHARACTERISTICS OF MONOPOLY 1. SINGLE SELLER - In a monopoly, there is only one firm controlling the entire market resulting in a lack of direct competition. 2. UNIQUE PRODUCT – Monopolist often offer a unique product or service, giving them exclusive control over the market demand for that particular good. One common example of monopoly is the local utility company that provides essential services such as electricity or water in a specific geographic area. In many regions , these utility companies are granted exclusive rights by a government to operate in a particular area, creating a monopoly for that service. Consumers typically do not have the option to choose an alternative provider for this essential utilities, leading to a single company having control over the entire market in that specific locality. Monopoly Themonopolist is the supply-side of the market and has complete control over the amount offered for sale Monopolistcontrols price but must consider consumer demand Monopoly 1.One seller – many buyers 2.One product (no close substitute) eg. Public utilities – Electricity 3.Barriers to entry 4.Price maker Kinds of Monopoly: Monopoly is of following kinds: 1. Simple Monopoly and Discriminating Monopoly: A simple monopoly firm charges a uniform price for its output sold to all the buyers. While a discriminating monopoly firm charges different prices for the same product to different buyers. A simple monopoly operates in a single market a discriminating monopoly operates in more than one market. 2. Pure Monopoly and Imperfect Monopoly: Pure monopoly is that type of monopoly in which a single firm which controls the supply of a commodity which has no substitutes not even a remote one. It possesses an absolute Monopoly power. Such a Monopoly is very rare. While imperfect monopoly means a limited degree of Monopoly. It refers to a single firm which produces a commodity having no close substitutes. The degree of Monopoly is less than perfect in this case and it relates to the availability of the closeness of a substitute. In practice, there are many cases of such imperfect monopoly. 3. Natural Monopoly: When a Monopoly is established due to natural causes then it is called natural monopoly. To-day India has got Monopoly in mica production and Canada has got Monopoly in nickel production. These Monopoly natures has provided to these countries. 4. Legal Monopoly: When anybody receives or acquires Monopoly due to legal provisions in the country. For Example: When legal monopolies emerge on account of legal provisions like patents, trade-marks, copyrights etc. The law forbids the potential competitors to imitate the design and form of products registered under the given brand names, patent or trade-marks. This is done to safeguard the interests of those who have done much research and undertaken risks of innovating a particular product. 5. Industrial Monopolies or Public Monopolies: In the general interest of the nation, when a government nationalizes certain industries in the public sector, whereby industrial or public monopolies are created. The Industrial Policy Resolution 1956, in India, for instance, categorically lays down that certain fields like arms and ammunition, atomic energy, railways and air transport will be the sole monopoly of the Central Government. In this way industrial monopolies are created through statutory measures.