Monopoly: Difference between revisions
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{{Placeholder box|How the practice works.}} | {{Placeholder box|How the practice works.}} | ||
===Types of monopolies | ===Types of monopolies== | ||
;Pure monopoly | ;Pure monopoly | ||
:One company has complete control over a product's supply, with no similar alternatives and significant obstacles for others to enter the market. | :One company has complete control over a product's supply, with no similar alternatives and significant obstacles for others to enter the market. | ||
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===Key characteristics=== | ===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> | ::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> | ||
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::*Deliberate exclusionary practices: | ::*Deliberate exclusionary practices: | ||
::::Predatory pricing or exclusive contracts. | ::::Predatory pricing or exclusive contracts. | ||
===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. | ::Unlike competitive firms, monopolists face the entire market demand curve. | ||
*Price discrimination strategies | *'''Price discrimination strategies''' | ||
:*First-degree | :*First-degree | ||
:::Charging each customer their maximum willingness to pay. | :::Charging each customer their maximum willingness to pay. | ||
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*'''Productive inefficiency''' | *'''Productive inefficiency''' | ||
:Without pressure, monopolies may lack incentives to: | :Without pressure from competitors, monopolies may lack incentives to: | ||
:*Minimize costs. | :*Minimize costs. | ||
:*innovate or improve product quality. | :*innovate or improve product quality. | ||