2. MONOPOLY
What Is a Monopoly?
Understanding a Monopoly
Types of Monopolies
Pros and Cons of a Monopoly
3. WHAT IS A MONOPOLY?
A monopoly is a market structure where a single seller or
producer assumes a dominant position in an industry or a sector.
Monopolies are discouraged in free-market economies as they
stifle competition and limit substitutes for consumers.
In the United States, antitrust legislation is in place to restrict
monopolies, ensuring that one business cannot control a market
and use that control to exploit its customers.
3
5. UNDERSTANDING A
MONOPOLY
Presentation title 5
A monopoly is a business that is characterized by a lack of competition within a market and
unavailable substitutes for its product. Monopolies can dictate price changes and create
barriers for competitors to enter the marketplace.
Companies become monopolies by controlling the entire supply chain, from production to
sales through vertical integration, or buying competing companies in the market
through horizontal integration, becoming the sole producer.
7. PROS
EASIER TO EFFECT SOCIAL POLICY (UNIVERSAL SERVICE FOR EXAMPLE)
- ECONOMIES OF SCALE AND SCOPE
CONS
- LACK OF INCENTIVE FOR INNOVATION
- INEFFICIENCIES IN PRICING
- AVERAGING OF RATES AND SERVICES-OFTEN LEADING TO BYPASS
Presentation title 7
Pros and Cons of a Monopoly
9. SUMMARY
Presentation title 9
Monopoly is a situation where there is a single seller
in the market. In conventional economic analysis, the
monopoly case is taken as the polar opposite of perfect
competition. By definition, the demand curve facing the
monopolist is the industry demand curve which is
downward sloping.