What is Monopoly?
The word monopoly for CS is rendered of two words: mono indicates one and Polein points to sell. In economics, monopoly directs to a company that sells a product in the market excluding the replacement. Hence, it is a one-firm industry.
All Features of Monopoly
There are four main features to understand Monopoly which will help you to create new ideas for your firms. The main features of a Monopoly are:
Only One Seller and Various Buyers
The major characteristics of the monopoly are to own one seller and various buyers. Since the individual firms build up all or the majority of the industry, there would be a small or no difference between the industry and sellers in these markets. Hence, the firm’s demand curve is identical to or almost similar to the industry’s demand curve. As there are various buyers, private buyers would affect the cost of the product in the monopoly market as the sellers’ regulation towards the market is too powerful.
Read Also: 8 Points of Transparent Taxation for Income & Corporate Tax, Business
No Produce Replacement Option
In the monopoly, the products produced through the monopolist pose no quicker replacement. These markets would only exist if the cross elasticity of the goods produced through the monopoly is zero. Hence the monopolist would find out the value of his option and cancel to sell below the asking price.
Very Difficult to Enter in Market
As the monopolists generate more and more profits the latest companies see various restrictions when it comes to the industry. Various causes are attached with that like current legal, technological, or substance barriers, which no one else would see. Many a time monopoly serves in the small market making it an economic challenge to insert a brand-slapping new business.
Pricing Control
In a monopoly, the companies have control over the good’s availability. However thanks to the bigger number of customers, small customer requests make up only a small portion of the total demand. Thus the buyer should furnish the cost of the product set through the monopolist.
Types of Monopoly
There are given two types of monopoly as per the knowledge of curriculum and method. These are given below in detail:
Government Driven
According to the name in the market, the government of the country or the states allows the person or firm the benefit of being an individual supplier of the goods in the market. As the seller becomes the individual or dominant seller the market evolves as a monopoly.
Natural Monopoly
A natural monopoly is a market in which the experience of the sellers rises the sales of their products in their company and with the higher fixed cost. Early sellers in the latest or upcoming markets. The advantage of the cost framework shall be availed by these salespeople and develop them quickly.
