The extent of monopoly power depends crucially on how we define the market. A profit-maximising firm with market power is most likely to use that market power to charge higher prices than if an industry was more competitive. The ability of a firm to influence or control the terms and condition on which goods are bought and sold. Even firms with a lot of market power might need to consider the threat of potential rivals.Market power depends on the structural characteristics of the industry.Ability to harness barriers to entry to maintain supernormal profits in the long run.Price setting power including the option of using price discrimination.What are the key features of a business having monopoly power in one or more markets? Most industries are contestable to a degree – there is always the threat of potential rivals Technological change creates new substitute products and competitors and helps to bring entry barriers down the Royal Mail lost their monopoly in parcels and letters deliveryĬompetition authorities might find other ways to inject competition e.g. What stops an industry becoming a pure monopoly?Ī pure monopoly might have their legal monopoly taken away e.g. A firm might have localised monopoly power with no close substitute available.High trade barriers which give increased monopoly power to a domestic firm protected by import tariffs.Lynd 3 : a commodity controlled by one party had a monopoly on flint from their quarries Barbara A. Some state-owned firms have monopoly status. monopoly noun monopoly m-n-p (-)l plural monopolies 1 : exclusive ownership through legal privilege, command of supply, or concerted action 2 : exclusive possession or control no country has a monopoly on morality or truth Helen M. licences required to operate, awarded franchises can give local/regional market power. High regulatory barriers to entry e.g.Significant internal economies of scale – the minimum efficient scale may be so high that only one supplier can fully exploit available economies of scale (i.e.What are the key characteristics of pure monopoly? A near pure monopoly occurs when one firm has a market share in excess of 90 percent.The nature of the market is that no close competitor or substitute exists.The firm effectively is the industry in this situation. Traditionally, monopolies benefit the companies that have them, as they can raise prices and reduce services without consequence. A pure monopoly is a single supplier within a defined market or industry Written by MasterClass Last updated: 4 min read When only one company controls an entire industryor even a sizeable percentage of that industrythe company is said to have a monopoly.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |