Monopoly: Difference between revisions

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===Key characteristics===

*Single producer

'''Single producer'''

::The market consists of only one company supplying the entire market demand.<ref>{{Cite web |last=Nasrudin |first=Ahmad |date=January 22, 2025 |title=Monopoly: Meaning, Examples, Characteristics, Causes, Advantages, Disadvantages |url=https://penpoin.com/monopoly/ |website=penpoin.com}}</ref><ref>{{Cite web |last=Tiwari |first=Dimple |date= |title=Monopoly Market: Features and Examples |url=https://www.vedantu.com/commerce/monopoly-market |website=vendantu.com}}</ref>

*No close substitutes

'''No close substitutes'''

::Consumers have no alternative products that can satisfy the same need.<ref>{{Cite web |date= |title=What is 'Monopoly' |url=https://economictimes.indiatimes.com/definition/monopoly?from=mdr |website=economictimes.indiatimes.com}}</ref>

*High barriers to entry

'''High barriers to entry'''

::Significant obstacles prevent competitors from entering the market.

:*Legal barriers

::*Legal barriers

:::Patents, copyrights, government licenses.

::::Patents, copyrights, government licenses.

:*Control of essential resources

::*Control of essential resources

:::Owning key manufacturing processes or mining operations

::::Owning key manufacturing processes or mining operations

:*Economies of scale

::*Economies of scale

:::Large fixed costs make single firm production most efficient.<ref>{{Cite web |last=Emerson |first=Patrick |date= |title=Intermediate Microeconomics |url=https://open.oregonstate.education/intermediatemicroeconomics/chapter/module-15/ |website=oregonstate.education}}</ref>

::::Large fixed costs make single firm production most efficient.<ref>{{Cite web |last=Emerson |first=Patrick |date= |title=Intermediate Microeconomics |url=https://open.oregonstate.education/intermediatemicroeconomics/chapter/module-15/ |website=oregonstate.education}}</ref>

:*Network effects:

::*Network effects:

:::Value increases with more users.<ref>{{Cite web |date=July 2023 |title=Monopoly |url=https://www.law.cornell.edu/wex/monopoly |website=law.cornell.edu}}</ref>

::::Value increases with more users.<ref>{{Cite web |date=July 2023 |title=Monopoly |url=https://www.law.cornell.edu/wex/monopoly |website=law.cornell.edu}}</ref>

:*Deliberate exclusionary practices:

::*Deliberate exclusionary practices:

:::Predatory pricing or exclusive contracts.

::::Predatory pricing or exclusive contracts.

*Price maker ability

::The monopolist can set prices rather than accept market prices.

===Price maker ability===

*Downward-sloping demand curve

:The monopolist can set prices rather than accept market prices.

*'''Downward-sloping demand curve'''

::Unlike competitive firms, monopolists face the entire market demand curve.

*Price discrimination strategies

*'''Price discrimination strategies'''

:*First-degree

:::Charging each customer their maximum willingness to pay.

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*'''Productive inefficiency'''

:Without pressure, monopolies may lack incentives to:

:Without pressure from competitors, monopolies may lack incentives to:

:*Minimize costs.

:*innovate or improve product quality.

@@ Line 26: / Line 26: @@
 ===Key characteristics===
-*Single producer
+'''Single producer'''
 ::The market consists of only one company supplying the entire market demand.<ref>{{Cite web |last=Nasrudin |first=Ahmad |date=January 22, 2025 |title=Monopoly: Meaning, Examples, Characteristics, Causes, Advantages, Disadvantages |url=https://penpoin.com/monopoly/ |website=penpoin.com}}</ref><ref>{{Cite web |last=Tiwari |first=Dimple |date= |title=Monopoly Market: Features and Examples |url=https://www.vedantu.com/commerce/monopoly-market |website=vendantu.com}}</ref>
-*No close substitutes
+'''No close substitutes'''
 ::Consumers have no alternative products that can satisfy the same need.<ref>{{Cite web |date= |title=What is 'Monopoly' |url=https://economictimes.indiatimes.com/definition/monopoly?from=mdr |website=economictimes.indiatimes.com}}</ref>
-*High barriers to entry
+'''High barriers to entry'''
 ::Significant obstacles prevent competitors from entering the market.
-:*Legal barriers
+::*Legal barriers
-:::Patents, copyrights, government licenses.
+::::Patents, copyrights, government licenses.
-:*Control of essential resources
+::*Control of essential resources
-:::Owning key manufacturing processes or mining operations
+::::Owning key manufacturing processes or mining operations
-:*Economies of scale
+::*Economies of scale
-:::Large fixed costs make single firm production most efficient.<ref>{{Cite web |last=Emerson |first=Patrick |date= |title=Intermediate Microeconomics |url=https://open.oregonstate.education/intermediatemicroeconomics/chapter/module-15/ |website=oregonstate.education}}</ref>
+::::Large fixed costs make single firm production most efficient.<ref>{{Cite web |last=Emerson |first=Patrick |date= |title=Intermediate Microeconomics |url=https://open.oregonstate.education/intermediatemicroeconomics/chapter/module-15/ |website=oregonstate.education}}</ref>
-:*Network effects:
+::*Network effects:
-:::Value increases with more users.<ref>{{Cite web |date=July 2023 |title=Monopoly |url=https://www.law.cornell.edu/wex/monopoly |website=law.cornell.edu}}</ref>
+::::Value increases with more users.<ref>{{Cite web |date=July 2023 |title=Monopoly |url=https://www.law.cornell.edu/wex/monopoly |website=law.cornell.edu}}</ref>
-:*Deliberate exclusionary practices:
+::*Deliberate exclusionary practices:
-:::Predatory pricing or exclusive contracts.
+::::Predatory pricing or exclusive contracts.
-*Price maker ability
-::The monopolist can set prices rather than accept market prices.
+===Price maker ability===
-*Downward-sloping demand curve
+:The monopolist can set prices rather than accept market prices.
+*'''Downward-sloping demand curve'''
 ::Unlike competitive firms, monopolists face the entire market demand curve.
-*Price discrimination strategies
+*'''Price discrimination strategies'''
 :*First-degree
 :::Charging each customer their maximum willingness to pay.
@@ Line 76: / Line 78: @@
 *'''Productive inefficiency'''
-:Without pressure, monopolies may lack incentives to:
+:Without pressure from competitors, monopolies may lack incentives to:
 :*Minimize costs.
 :*innovate or improve product quality.