Explain the meaning of Monopoly with its features Economics

The Herfindahl-Hirschman index indicates the competition or the market concentration of an industry. It is obtained by squaring the size of the different firms in the industry and summing the resulting numbers. Lower HHI indicates more competition, while a higher one indicates less or no competition (i.e., monopoly). The concentration ratio indicates the extent of competition prevalent in an industry. Zero implies the existence of a large number of firms (high competition) and one implies the absence of competitors (no competition or a monopoly).

#5 – Becomes the industry

Companies with patents or extensive research and development costs, like pharmaceutical companies, are considered natural monopolies. Businesses love the idea of a free-market economy, so why then, would a business want to become a monopolist? Just think…if a business can control the entire market for a product, then they eliminate competition and are almost guaranteed a profit. In this section, you’ll learn about what a monopoly is and why firms try to eliminate their competition. A pure monopoly is the rarest form wherein the product (or service) being sold has no close substitutes.

Ease of entry

1. A monopoly is a market structure that consists of a single seller who has exclusive control over a commodity or service.
2. It is helpful to distinguish the related ideas of market conduct and market performance.
3. A natural monopoly depends on unique raw materials or sophisticated technology to manufacture its products.
4. In this situation the supplier is able to determine the price of the product without fear of competition from other sources or through substitute products.
5. This is often done by a monopolist to demonstrate power and pressurise potential and existing rivals.
6. Until recently, a combination of strong sunshine and low humidity or an extension of peat marshes was necessary for producing salt from the sea, the most plentiful source.
7. The concentration ratio indicates the extent of competition prevalent in an industry.

We spend a lot of time researching and writing our articles and strive to provide accurate, up-to-date content. However, our research is meant to aid your own, and we are not acting as licensed professionals. We recommend that you use your own judgement and consult with your own consultant, lawyer, accountant, or other licensed professional for relevant business decisions.

1. A domestic example would be the cost of airplane flights in relation to their takeoff time; the closer they are to flight, the higher the plane tickets will cost, discriminating against late planners and often business flyers.
2. A monopoly is a market structure with a single seller or producer that assumes a dominant position in an industry or a sector.
3. It concerns with the competition that would come from other undertakings which are not yet operating in the market but will enter it in the future.
4. When a single seller supplies the entire output of an industry, and thus can determine his selling price and output without concern for the reactions of rival sellers, a single-firm monopoly exists.
5. Seller concentration refers to the number of sellers in an industry together with their comparative shares of industry sales.
6. For example, most economic textbooks cost more in the United States than in developing countries like Ethiopia.

A monopoly that tends to defraud the customer through extremely high prices and inferior quality goods is considered to be illegal. Therefore, such monopolies are discouraged and dissolved by government intervention. However, companies operating in sectors like oil, gas, water, electricity, etc., are government-owned monopolies.

Notably, the criterion is a subjective one; the buyers’ preferences may have little to do with tangible differences in the products but are related to advertising, brand names, and distinctive designs. The degree of product differentiation as registered in the strength of buyer preferences ranges from slight to fairly large, tending to be greatest among infrequently purchased consumer goods and “prestige goods,” particularly those purchased as gifts. The British East India Company was created as a legal trading monopoly in 1600. The East India Company was formed for pursuing trade with the East Indies but ended up trading mainly with the Indian subcontinent, North-West Frontier Province, and Balochistan. The Company traded in basic commodities, which included cotton, silk, indigo dye, salt, saltpetre, tea and opium.

Measuring Monopoly Power

Microsoft Corporation was the first company to hold a pure monopoly position on personal computer operating systems. As of May 2024, its desktop Windows software still held a market share of more than 73%. De Beers’ market share by value fell from as high as write the meaning of monopoly 90% in the 1980s to less than 40% in 2012, having resulted in a more fragmented diamond market with more transparency and greater liquidity. Formed in 758, the commission controlled salt production and sales in order to raise tax revenue for the Tang dynasty.

A monopoly is a market where one firm (or manufacturer) is the sole supplier of certain goods or services. This firm faces no competition due to which it can set its own prices, thereby exercising full control over the market. The monopolist aims to generate high profits by selling products (or services) that do not have close substitutes. Monopoly and competition, basic factors in the structure of economic markets.

Your Monopoly Through Time: From Phone Calls to Secret Missions!

A sense of familiarity that generates consequently deters them from going elsewhere to satisfy their demand. Hence, they find it difficult to capture market share for the product and service that they offer. Strategic Pricing allows a monopolist to charge any price for their offerings. The price may be set to be extremely low – predatory pricing – in order to prevent any firm from entering the market.

A monopoly is an economic market structure where a specific person or enterprise is the only supplier of a particular good. Antitrust legislation is in place to restrict monopolies, ensuring that one business or group of businesses cannot control a market and use that control to exploit consumers. After controlling the nation’s telephone service for decades as a government-supported monopoly, AT&T fell to antitrust laws. The boundaries of what constitutes a market and what does not are relevant distinctions to make in economic analysis. In a general equilibrium context, a good is a specific concept including geographical and time-related characteristics. Most studies of market structure relax a little their definition of a good, allowing for more flexibility in the identification of substitute goods.

In economics, monopoly and competition signify certain complex relations among firms in an industry. A monopoly implies an exclusive possession of a market by a supplier of a product or a service for which there is no substitute. In this situation the supplier is able to determine the price of the product without fear of competition from other sources or through substitute products.

Despite wide agreement that the above constitute abusive practices, there is some debate about whether there needs to be a causal connection between the dominant position of a company and its actual abusive conduct. Furthermore, there has been some consideration of what happens when a company merely attempts to abuse its dominant position. Museums like the Strong National Museum of Play are preserving Monopoly sets through temperature-controlled storage, specialised conservation teams, and robust preservation policies. They also acquire rare editions through donations and auctions to maintain the game’s cultural heritage.