What is Monopoly?

Single Has unique No

Seller Product Competitor
 Characteristics
Monopoly Market Structure

A Lack of Barriers to
Competition
Substitutes Entry

Price Maker Profits

 Barriers to Entry
Control of
Legal Natural
Physical
Barriers to entry are the legal,
Monopoly Monopoly Resource
technological, or market forces
that discourage or prevent
potential competitors from
entering a market
Intimidating
Promoting
Potential
Innovation Competition
ADVANTAGES DISADVANTAGES

 Stability of prices Higher prices

Economies of Scale Price discrimination

Research and Inferior goods and

Development services
Sources of Monopoly Power

Economies of Scale
Economies of Scope
Cost Complimentarity
Patents and other legal barriers
 Monopolistic Competition
Monopolistic competition is a market structure which combines
elements of monopoly and competitive markets. Essentially a
monopolistic competitive market is one with freedom of entry and
exit, but firms can differentiate their products. Therefore, they have
an inelastic demand curve and so they can set prices. However,
because there is freedom of entry, supernormal profits will encourage
more firms to enter the market leading to normal profits in the long
term.