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    Azaz Ahmed
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    This chapter discusses monopoly, monopolistic competition, and oligopoly market structures. It defines each structure and provides examples. Monopoly is dominated by a single firm with barriers to entry. Monopolistic competition has many small firms with differentiated but substitutable products. Oligopoly has a few large firms where firms are interdependent. It also discusses price discrimination strategies used by monopolies. The chapter introduces the Herfindahl-Hirschman Index to measure market concentration and determine market structure based on concentration levels. It applies the HHI to Bangladesh's telecom market and finds it has an oligopolistic structure.

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    This chapter discusses monopoly, monopolistic competition, and oligopoly market structures. It defines each structure and provides examples. Monopoly is dominated by a single firm with barriers to entry. Monopolistic competition has many small firms with differentiated but substitutable products. Oligopoly has a few large firms where firms are interdependent. It also discusses price discrimination strategies used by monopolies. The chapter introduces the Herfindahl-Hirschman Index to measure market concentration and determine market structure based on concentration levels. It applies the HHI to Bangladesh's telecom market and finds it has an oligopolistic structure.

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    4 views13 pages

    CH 10 Monopoly

    Uploaded by

    Azaz Ahmed
    This chapter discusses monopoly, monopolistic competition, and oligopoly market structures. It defines each structure and provides examples. Monopoly is dominated by a single firm with barriers to entry. Monopolistic competition has many small firms with differentiated but substitutable products. Oligopoly has a few large firms where firms are interdependent. It also discusses price discrimination strategies used by monopolies. The chapter introduces the Herfindahl-Hirschman Index to measure market concentration and determine market structure based on concentration levels. It applies the HHI to Bangladesh's telecom market and finds it has an oligopolistic structure.

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    © All Rights Reserved
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    of 13

    Chapter 10

    Price and Output under Pure Monopoly


    Avijit Mallik
    Assistant Professor
    IBA, University of Dhaka
    Monopoly Market Power: Features & Sources

    MONOPOLY Sources of Monopoly power


    ◦ 1 firm in market Natural Resources: ALCOA (bauxite producer), De
    ◦ Firm market share 100% Beer (Uncut Diamond producer)
    ◦ Unique product
    Natural Monopoly from scale of Production: IBM in
    ◦ Complete barriers to entry 80’s
    ◦ Significant Market power
    ◦ Price Setter Patent: Xerox (Photocopier) , AstraZeneca,
    ◦
    Moderna (Covid Vaccine) , Polaroid (Camera)
    No substitutes
    Government Control: WASA, DESCO, BAPEX, TITAS,
    Bangladesh Railway
    Price Discrimination
    First Degree (Entire CS is extracted)
    Ex: Automobiles sold by dealer based on personal data
    Second Degree (Part of the CS is extracted) companies price based on how
    much they can sell.
    Ex: Bulk purchase discount on single product, Coupons, Buy two get one
    Third Degree (Charging diff price in different markets)
    Example: segmentation based on age, income, user. Parks, movie tickets,
    airlines, industrial vs domestic electricity user
    Profit Maximization (Monopoly and
    Monopolistic)
    Chapter 11
    Other Market Structures: Monopolistic &
    Oligopoly
    MONOPOLISTIC COMPETITION

    ◦ Many firms
    ◦ Firm size small
    ◦ Product differentiation limited
    ◦ Easy entry and exit of firms
    ◦ Close substitutes
    ◦ Cigarette, Detergent, Biscuits, Toothpaste
    OLIGOPOLY
    ◦ Few firms in the market: Telco, Airlines, Beverage, News
    Media, Big Tech, Auto Makers
    ◦ Large market shares
    ◦ Significant product differentiation possible
    ◦ Difficult to enter market; Patent or Capital Requirement
    or strong dealer network or advertisement
    ◦ Interdependence: Price, Advertisement
    ◦ Cartel: OPEC
    Duopoly Market
    Two giants
    Coke-Pepsi, Nagad-Bikash, Nike-Adidas, Netflix-Amazon Prime, Apple ios, Google Android
    Can maximize profit by colluding or cooperating
    Problem: Lack of Trust
    How to determine Market Structure?
    The Herfindahl–Hirschman Index (HHI) is a common measure of market concentration of an
    industry
    Formula:

    HHI = 10000 monopoly


    HHI greater than 2500 but less than 10000- Oligopoly
    HHI greater than 1500 but less than 2500- Monopolistic
    HHI less than 1500- Perfect competition
    TELCO MARKET STRUCTURE:
    USING HHI
    Company Market Share
    GP 46%
    ROBI 29%
    BANGLALINK 21%
    TELETALK 4%
    WHAT IS TELCO SECTOR’S HHI &
    MARKET STRUCTURE?
    HHI VALUE= 46^2+ 29^2+21^2+4^2
    HHI=3414>2500
    SO, TELCO INDUSTRY OF BANGLADESH IS OILIGOPOLISTIC IN NATURE
    THANK YOU

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