MONOPOLY

MARKET
• GROUP 9
Group Members
DEFINITION AND CHARACTERISTIC
OF MONOPOLY MARKET
 Definition of Monopoly Market

The Monopoly is a market structure

characterized by a single seller, selling the
unique product with the restriction for a new
firm to enter the market
 Characteristics of Monopoly Market
1. Seller are price maker
2. Buyers are price taker
3. New firms are hard to enter monopoly market
4. Goods doesn’t substitutable
 Sellers are price maker

In Monopoly Markets there is only one sellers, goods or

services that can only be purchased on the monopoly
market, the good and services are not available in other
market. Monopoly markets can influence the market price
by its own production decisions
 Buyers are price taker

Each buyer is sufficiently small in relation to

the overall market that they can’t influence the
market price by the amount they consume.
 New Firms hard to enter monopoly market

This is a barrier for the new firms that will enter the monopoly
market, the monopoly firm faces no threat of entry from potential
rivals. If the firm lowering the price, it is shows that the firm
prevent other firm enter the monopoly market. Barriers can be in
the form of legality which is limited by law, technological barriers
are technology that is used is very high so that the items are
difficult to imitate, and capital barriers are the need for large capital
in producing similar goods.
 The Goods doesn’t substitutable

if a firm produces goods that consumers can easily

switch away from in favor of alternative goods in a
different market, then it doesn’t have monopoly
power because it is effectively competing with the
firms in that other market.
From that characteristic, the example are :
FACTORS THAT CONTRIBUTING
MONOPOLY MARKET
 PRODUCT
DIFFERENTIATION
As a product becomes more
differentiated and unique for
consumers, it will become
more difficult to compare it
to other products
MONOPOLY RIGHTS
FROM GOVERNMENT
There are some governments
regulations that will create monopoly
powers, such as patent and copyrights
rights and exclusive franchise rights
granted to public service company
UNIQUE AND DIFFERENT
RESOURCES
Monopoly can also happen if a
company controls all or most of
the available raw material,
which cannot be owned by
other companies
ECONOMIES OF
SCALE
Monopoly companies can reduce the price of
their goods if production is higher. At a very
high level of production, prices are so low that
new companies will not be able to compete
with companies that have first developed
 LARGER AND MORE
EXPENSIVE BARRIER TO
ENTRY
Barriers to entry limit competition to
a new firms, because it prevents or
discourage potential competitors
from entering a market
SMALL NUMBER
OF COMPETITORS
Because there are so many
barriers to entry the monopoly
market, the amount of
competitors will be small
MAXIMIZING MONOPOLY
PROFIT IN A SHORT TERM
Profit Maximize in Monopoly in Short Term