Monopoly: Difference between revisions

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A [[wikipedia:Monopoly|monopoly]] ~~is a~~ market in ~~which there exists only~~ a single ~~supplier of a certain good or service~~.

A [[wikipedia:Monopoly|monopoly]] represents one of the most extreme market structures in economics, characterized by a single seller dominating an entire industry without meaningful competition.

==How it works==

===Characteristics of a monopoly===

*Single producer/seller

*No close substitutes

*High barriers to entry

*Price maker ability

*Downward-sloping demand curve

===Monopoly process===

Operate differently from competitive markets:

====Profit maximization mechanism====

Monopolists maximize profits by producing at the quantity where marginal revenue equals marginal cost (MR=MC).

Maximization process:

*Determining the output level where MR=MC

*Setting the price according to what consumers are willing to pay for that quantity

*Earning economic profits in the long run due to barriers preventing competitor entry

====Price Discrimination Strategies====

*First-degree: Charging each customer their maximum willingness to pay.

*Second-degree: Pricing varies by quantity purchased.

*Third-degree: Segmenting markets based on characteristics like age, location, or time of purchase

====Barriers to entry====

*Legal barriers:

*Control of essential resources:

*Economics of scale:

*Network effects:

*Deliberate exclusionary practices:

==Why it is a problem==

{{Placeholder box|If the theme or common term is positive for the consumer this section can be omitted.

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 {{Placeholder box|Add a 2-3 sentence introduction starting with e.g. "'''{{PAGENAME}}''' is a practice in which businesses ... When writing the article, insert text in the space below this box, and then delete this tip box (and the other tip boxes below). In the visual editor, just click on a box and press backspace to delete it. In the source editor, simply delete the double curly brackets, and the text inside them.}}
-A [[wikipedia:Monopoly|monopoly]] is a market in which there exists only a single supplier of a certain good or service.
+A [[wikipedia:Monopoly|monopoly]] represents one of the most extreme market structures in economics, characterized by a single seller dominating an entire industry without meaningful competition.
 ==How it works==
 {{Placeholder box|How the practice works.}}
+===Characteristics of a monopoly===
+*Single producer/seller
+*No close substitutes
+*High barriers to entry
+*Price maker ability
+*Downward-sloping demand curve
+===Monopoly process===
+Operate differently from competitive markets:
+====Profit maximization mechanism====
+Monopolists maximize profits by producing at the quantity where marginal revenue equals marginal cost (MR=MC).
+Maximization process:
+*Determining the output level where MR=MC
+*Setting the price according to what consumers are willing to pay for that quantity
+*Earning economic profits in the long run due to barriers preventing competitor entry
+====Price Discrimination Strategies====
+*First-degree: Charging each customer their maximum willingness to pay.
+*Second-degree: Pricing varies by quantity purchased.
+*Third-degree: Segmenting markets based on characteristics like age, location, or time of purchase
+====Barriers to entry====
+*Legal barriers:
+*Control of essential resources:
+*Economics of scale:
+*Network effects:
+*Deliberate exclusionary practices:
 ==Why it is a problem==
 {{Placeholder box|If the theme or common term is positive for the consumer this section can be omitted.