Monopoly: Difference between revisions

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Added Example and citations
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===Monopoly process===
===Monopoly process===
:Monopoly operations differ from competitive markets in key ways:


====Profit maximization====
;Profit maximization
:Primary objective is to increase the wealth of the owner or the shareholders of the firm by increasing the net profits.
:Primary objective is to increase the wealth of the owner or the shareholders of the firm by increasing the net profits.


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::*Setting the price according to what consumers are willing to pay for that quantity.
::*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.
::*Earning economic profits in the long run due to barriers preventing competitor entry.
====Price Discrimination Strategies====
:Charging different prices to different customers for the same product:
:*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: Patents, copyrights, and government licenses.
:*Control of material resources: Owning key inputs such as mines, transport, etc.
:*Economics of scale: Large fixed costs make single-firm production most efficient, such as utility companies.
:*Network effects: Value increases with more users.
:*Deliberate exclusionary practices: Predatory pricing or exclusive contracts.


==Why it is a problem==
==Why it is a problem==
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*Anheuser-Busch InBev (AB InBev) was created in 2008 from the merger of the two largest beer companies, Anheuser-Busch and InBev. 1.88 billion hectolitres produced globally (one hectoliter equals 100 liters or 26.5 gallons U.S.). AB InBev accounting for 506 million hectoliters, more than double the production of the second largest company, Heineken.<ref>{{Cite web |last=Conway |first=Jan |date=December 11, 2024 |title=Anheuser-Busch InBev (AB InBev) - Statistics & Facts |url=https://www.statista.com/topics/1904/anheuser-busch-inbev-ab-inbev/#topicOverview |website=statista.com}}</ref>
*Anheuser-Busch InBev (AB InBev) was created in 2008 from the merger of the two largest beer companies, Anheuser-Busch and InBev. 1.88 billion hectolitres produced globally (one hectoliter equals 100 liters or 26.5 gallons U.S.). AB InBev accounting for 506 million hectoliters, more than double the production of the second largest company, Heineken.<ref>{{Cite web |last=Conway |first=Jan |date=December 11, 2024 |title=Anheuser-Busch InBev (AB InBev) - Statistics & Facts |url=https://www.statista.com/topics/1904/anheuser-busch-inbev-ab-inbev/#topicOverview |website=statista.com}}</ref>
*Carnegie Steel Company (1900).<ref>{{Cite web |title=The Founding of U.S. Steel and the Power of Public Opinion |url=https://www.library.hbs.edu/us-steel/exhibition/the-founding-of-u.s.-steel-and-the-power-of-public-opinion |website=Harvard Business School}}</ref>
*Carnegie Steel Company (1900).<ref>{{Cite web |title=The Founding of U.S. Steel and the Power of Public Opinion |url=https://www.library.hbs.edu/us-steel/exhibition/the-founding-of-u.s.-steel-and-the-power-of-public-opinion |website=Harvard Business School}}</ref>
*De Beers Group had 90% market share in 1980 and 29% as of 2022.<ref>{{Cite web |last=Jaganmohan |first=Madhumitha |date=June 26, 2025 |title=Market share of the leading diamond mining companies worldwide in 2023 |url=https://www.statista.com/statistics/585450/market-share-of-diamond-supply-worldwide-by-producer/#:~:text=Market%20share%20of%20the%20leading%20diamond%20producers%20worldwide%202023&text=As%20of%202023%2C%20the%20Russian,global%20diamond%20production%20market%20share. |website=Statista}}</ref>
*De Beers Group:
:Established by Cecil Rhodes in 1888.They have faced numerous allegations throughout its history. He purchased the remaining mines and diamonds from other companies, nearly 85% of the diamond market fell into the hands of Da Beers Group. After 50 year long reign over the diamond market, it began to lose its control in the 1950s when new mines were discovered in other parts of the world. The company is responsible for 30% of diamond sales globally. The company has also been accused of limiting the supply of diamonds to manipulate its prices. had 90% market share in 1980 and 29% as of 2022.<ref>{{Cite web |last=Whalley Curwen
|first=Jason Peter |date=February 2007 |title=Internationalization andDe-internationalization in the Telecommunications Industry|url=https://scholarship.law.umn.edu/cgi/viewcontent.cgi?referer=&httpsredir=1&article=1235&context=mjlst |website= }}</ref><ref>{{Cite web |last=Jaganmohan |first=Madhumitha |date=June 26, 2025 |title=Market share of the leading diamond mining companies worldwide in 2023 |url=https://www.statista.com/statistics/585450/market-share-of-diamond-supply-worldwide-by-producer/#:~:text=Market%20share%20of%20the%20leading%20diamond%20producers%20worldwide%202023&text=As%20of%202023%2C%20the%20Russian,global%20diamond%20production%20market%20share.|website=Statista}}</ref>
*[[Google]].
*[[Google]].
*Luxottica.
*Luxottica.