Title: Monopoly Economies Of Scale Economics Essay
Headings: Monopoly Economies Of Scale Economics Essay
Monopoly Economies Of Scale Economics Essay
INTRODUCTION
1. Large number of firms:
2. Product differentiation:
3. Free entry and exit:
4. Lack of perfect knowledge of the market:
5. Advertisement Cost:
Single Seller
Restricted Entry
Full Control Over Price
Price Discrimination
Increased Scope for Mergers
Price Elasticity
Lack of Innovation
Lack of Competition
SUPERNORMAL
NORMAL
Large Number of Small Firms
Identical Goods
Perfect Resource Mobility
Perfect Knowledge
Large Number of Small Firms
Similar, But Not Identical Goods
Resource Mobility
Extensive Knowledge
Small Number of Large Firms
Identical or Differentiate Products
Identical Product Oligopoly:
Differentiate Product Oligopoly:
Barriers to Entry
Characteristics
The table below shows a summary of market structures , comparing them along with their characteristics:
Characteristic
Perfect Competition
Monopolistic Competition
Oligopoly
Monopoly
Market Structure comparison
Number of firms
Market power
Elasticity of demand
Product differentiation
Excess profits
Efficiency
Profit maximization condition
Pricing power

Content: Under Monopoly / Monopolistic Competition, the firm faces a downward sloping demand curve. Its price does affect the quantity sold either because it is the only firm in the market (a monopoly) or because the products in its market are not perfect substitutes (monopolistic competition). A situation in which a single company or group owns all or nearly all of the market for a given type of product or service. By definition, monopoly is characterized by an absence of competition, which often results in high prices and inferior products. According to a strict academic definition, a monopoly is a market containing a single firm. In such instances where a single firm holds monopoly power, the company will typically be forced to divest its assets. Antimonopoly regulation protects free markets from being dominated by a single entity. PURE MONOPOLY
Pure monopoly is a type of market characterized by a single seller or producer, a unique product, with no close substitute, the ability of the seller to ask any price it wishes, entry to the industry completely blocked by legal, technological or economic barriers, and no need for non price actions, except public relations or goodwill advertising. MONOPOLY UNIQUE PRODUCT
A monopoly exists when a firm is the only producer of a given product. That product is therefore unique to that firm.