The characteristics associated with a monopolistic market make a single seller both a market controller and a price maker. He enjoys the power to set the price of his goods. Characteristics of the Monopoly Market –There are many different types of monopoly markets, but they all have one common feature: a downward-sloping demand curve. In other words, the demand curve for a monopoly market is not perfectly elastic. Monopolies are the opposite of oligopolies; Multiple smaller companies compete for a single market. As a result, each company can exercise some monopoly power over the other companies in the market.
Type of MonopolyPure MonopolyA pure monopoly is a sole seller in a market or industry with high barriers to entry, such as significant upfront costs with no substitute for a product. Microsoft Corporation was the first company to have a pure monopoly on personal computer operating systems. As of 2022, its Windows desktop software still held a 75% market share. Monopolistic CompetitionMonopolistic competition is defined as having multiple sellers with similar substitutes in an industry. Barriers to entry are low, and competing companies differentiate themselves through pricing and marketing efforts. Their offerings are not perfect substitutes like Visa and MasterCard. Other examples of monopolistic competition include retail stores, restaurants, and beauty salons. Natural Monopoly Public Monopoly Reasons for the Existence of the Monopoly Market- Monopoly arises in the market due to the following three reasons.
What are the Sources of Monopoly Power? In a monopolistic market structure, individual control of the market is due to the following:
A market can be defined as a place where two or more parties meet for economic exchange. A marketplace facilitates the exchange of goods and services, such as in a retail store where people meet face-to-face, or even virtual, such as on online e-commerce websites. In a market, there are buyers and sellers. Pros and Cons of Monopoly Market –Pros of Monopoly Market: 2 . Improve Innovation 3. Sustainable Development to Benefit Society For example, Google benefits from a certain monopoly in the search engine industry. Google is constantly improving its platform to improve the user experience day by day. 4. International Competition 5. Build a Cash Reserve for Tough Times For example, from 2020 to 2022, the COVID pandemic affected most businesses around the world. Companies that had cash reserves could have easily recovered and avoided this situation. Cons of Monopoly Market: Monopolistic firms can increase the price of goods and services without worrying about the competition (since no competition is available in a monopoly market). 2. Scale Discrepancies 3. Lack of Other Product Options for Consumers 4. Lack of innovation and improvement in product quality 5. Low Wages for Working Employees Regulation of MonopoliesThe government may wish to regulate the monopoly to protect the interests of consumers. For example, monopolies have the market power to set prices higher than competing markets. The government can control monopolies by:
Why does the Government Control Monopolies?
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