There are certain advantages along with certain disadvantages of having a monopolistic market.In case of intolerable effects, it becomes necessary for government to keep a check on monopoly power
3. Definition
“The exclusive possession or control of the supply
of or trade in a commodity or service.”
Features:
No close substitute
Difficulty of Entry of New Firm
Monopoly is also an Industry
One seller 7 Large no of buyers
4. Misconceptions regarding Monopoly
• Maximum Profits and not in Maximum Price
• Maximum Total Profits and not Maximum
Profit per Unit
• Law of Increasing Returns
5. REASONS FOR EMERGENCE OF
MONOPOLY.
GOVERNMENT LICENSING.
PATENT RIGHTS.
SOLE OWNERSHIP OF RESOURCES.
NATURAL MONOPOLY .
8. To or not to
that is the question …
Be BeRegulate Regulate
9. Need to Control Monopoly
To Prevent charging high price
Ensure quality of service
To prevent exploitation of
Monopsony
10. To promote competition
To regulate Natural monopolies
To prevent price discrimination
11. Measures to Control Monopoly
Anti monopoly legislation
• Many countries of the world have enacted
legislation to curb monopolies.
• In India the Monopolistic and Restrictive
Trade Practices Act,1969 was enacted to
prevent monopolies.
12. • MRTP Act was passed which came into force
from June, 1970.
• Provisions of this act was divided into three
parts
14. OTHER PROVISIONS
1.Enactment of Foreign Exchange Regulation Act (FERA) 1973.
2. The expansion of the public sector particularly in infrastructure
and in basic and heavy industries.
3. Vigorous promotion of village and small industries.
4. Regulation of flow of financial resources to the private sector
from the public financial institutions.
6. Development of the co-operative sector.
7. Price regulation and regulation of distribution
15. Promoting Fair Competition
Competition ensures efficiency of firms and
results in better quality, lower price and
variety of choice to consumers.
In India, the government has set up the
Competition Commission to promote
competition in all sectors of business.
16. • Consumer Association
• Media Publicity
• Government Regulation
• Taxation
• Controlling Price and Output
• State Capitalism