This document discusses monopoly, which occurs when there is a single seller of a good or service without close substitutes. Key characteristics of a monopoly include barriers to entry for competitors. The document provides several examples of monopolies, such as De Beers' control of the diamond market and Xerox's patent on plain paper copies. It also discusses price discrimination, where a firm charges different prices to different customers, and dumping, which is selling abroad at a lower price than domestically.

1. MONOPOLY
SUBMITTED BY:
ANKUSH BATHLA
15101101

2. MONOPOLY
• A firm is a Monopoly when it is the only
producer or provider of a good which does not
have a close substitute.
• When monopolies occur there are usually
barriers to entry

3. BARRIERS TO ENTRY
1)Economies of scale
2) Patents or licenses
3) Cost advantages
4) Consumer switching costs create product
loyalty.

4. CHARACTERSTICS
• One seller
• Monopoly is an industry
• Restrictions on entry of new firms
• No close substitutes
• Price maker
• Price discrimination
• Absence of supply curve

5. SOURCES OF MONOPOLY
• CONTROL OVER RAW MATERIALS
• Patents
• Technical barriers
• Government policy
• Entry lag
• Unfair competition
• Capital size

6. EXAMPLE OF MONOPOLY
• True monopolies generally exist in
government controlled markets.
• Examp: Indian railway
• Monopoly in private business is rare.
• Private firms who have considerable market
share.
• Examp: Microsoft, Intel, Google

7. EXAMPLES
Example 1: Xerox had a patent which granted
the firm a monopoly in the “plain paper
copies” (PPC) until 1975.
Example 2: Debeers – the diamond cartel – was
so large that at point it controlled 90% of the
world’s diamonds.
Example 3: In Houston (USA) there were 2
newspapers until 1995, the Houston Post
and the Houston Chronicle. The Post went
out of business which brought an increase of
62% in the prices of advertisements at the
Chronicle while its sales only rose by 32%.

8. ASSUMTIONS
• There is only 1 firm in the market
• The firm faces the whole aggregate demand
p=P(Q). Therefore it is aware that Dq  Dp.

9. EQUILLIBRIUM OF THE FIRM UNDER
MONOPOLY

10. PRICE DISCRIMINATION
It refers strictly to the practice by a seller to
charging different prices from different buyers
for same good

11. KINDS OF PRICE DISCRIMINATION
1. Personal price discrimination
2. Geographical price discrimination
3. Price discrimination according to use

12. EFFECTS OF PRICE DISCRIMINATION
Benefits:
1. Benefits to poor
2. Public utility services
3. Fuller utilization of resources
Drawbacks:
1. No use of factors of production
2. Less production

13. DUMPING
• It means selling the product in foreign market
at a low price then in domestic market.