Different types of monopoly economics8/16/2023 ![]() The business might require a huge amount of capital which might be difficult for other businesses to source.This might discourage potential sellers from entering the market. The existing seller, with a wide customer base, might enjoy economies of scale that a new business might not achieve in the initial years. The cost of production might be very high for a new business to bear.The Government might bar the entry of other firms in a particular market, allowing one seller to enjoy a monopoly.The seller has exclusive ownership of the raw material or the resource needed for the manufacturing of the product.However, monopolies might exist because of the following reasons – Reasons for the existence of monopoly marketsĪ monopoly market is not very common because competitors constantly try to enter and compete to capture the markets. The monopoly business might own a resource not owned by any other business.Monopolies often have price discrimination and constantly aim for profit maximisation.There are barriers to the entry of new firms. ![]() This means that they can determine the price of their products, and the consumers, more often than not, have to accept the price because of the lack of substitutes Monopoly businesses are called price-makers.Some of the features of a monopoly market are as follows – Price and output determination is done on a short and long-term basis.Monopolies can maximise their profits as they are price makers.A monopoly market structure is different from perfect competition and a monopolistic market.Monopoly means a market wherein there is only one seller of a unique product.Government regulation can help to promote competition and prevent monopolies from becoming too powerful. Firms are inefficient if they are left unregulated: If left unregulated, monopolies may be inefficient due to lack of competition, which can lead to higher prices and reduced innovation. ![]()
0 Comments
Leave a Reply.AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |