Economics

A monopoly is exclusive possession or control of the supply or trade in a commodity or service and in an economy this form of power can create a decline in the welfare of the consumer. The government may seek to regulate monopolies as a way to protect the interests of the consumer and use regulations as a way to limit price increases. These regulations are intended to reduce the practices of unfair business because monopolies have the ability to charge unreasonable high prices for the goods and services proving detrimental to consumers.

Monopoly is a single firm that controls the market of a given product. In a monopoly there is an absence of competition, which results in high prices and inferior products. Because there is an absence of competition and the firm has total domination of the market, the demand curve in the entire market for the good is equal to the demand for the individual firm’s output. A key characteristic of a monopoly is the individual’s firm downward sloping demand that shows that the firm has some market power. Market power is the ability to control price without losing market share. A monopoly’s profit maximization is achieved when marginal cost equals marginal revenue.

Oligopolistic is a market structure which under the imperfect competition. According to Sloman & Garratt, oligopoly is only few large firms share a large portion of industry and control the market. When we hear that a term about “Big three”, “Big four” or “Big five” it can be set down as oligopolistic industry. In the oligopoly market competition, depends on the firms produce homogeneous or differentiated products and it will be categorize as homogeneous oligopoly or differentiated oligopoly. As Mcconell & Brue, 2008 stated because of the small number of firms, oligopolistic have worthy of consideration command over the prices and they have to think about their competitors conceivable reaction to their product`s price, product`s quality, advertising outlays and so on. The few large firms are interdependent but they have to always be awake of competitor`s action to maintain their firm can stand strong in the industries. Oligopolistic have a strong barriers of entry for the new competitors, which alike and dedicative by the pure monopoly. According to Jackson, Mclver & Wilson stated oligopolistic industries have a large economies of scale have to be consider for the new competitors because they must have a large amount of capital to invest heavy on the technology in the beginning, and this is the prevention of new competitors can easily enter to the industry. Furthermore, there are many industries are counted as oligopolistic for instance mining, steel, soft drinks, airlines,

In its essence a monopoly is a situation in which only a single company or group has the ownership of nearly all or all of the market for the given product or service. Therefore, a monopoly is a situation where competition is absent.

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 are able to 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.

The monopoly market structure (sometimes called a pure monopoly) is free to set any price it chooses. Since it is free to set its prices, it is referred to as a price maker and not a price taker like a competitive firm. Unlike the consumers of a perfectly competitive firm, the consumers of a monopolistic firm cannot go elsewhere.

Unlike competitive markets consisted of a large number of producers which compete with one another to satisfy consumer’s needs and have no influence on price, monopolistic markets are made up of only one producer who is able to control prices in the market. Stager (1992) notes it is the case of a pure monopoly which appears when a commodity is produced by only one producer and it does not have any close substitutes (cited in Manesh and Karimani, 2017). Evidently, in the absence of alternative products, the producer does not compete with others. He furthermore states this tendency happens rarely in real world since majority of commodities could be replaced by other raw materials. It is, therefore, considered the definition of monopoly relies

A monopoly has certain characteristics, namely being the sole provider in the market, enjoying abnormal profits, having freedom to control prices, being protected by high entry barriers, and having no close substitutes (unknown, 2012).

7) Elements of monopoly :- There exist some elements of monopoly under oligopolistic situation. Under oligopoly with product differentiation each firm controls a large part of the market by producing differentiated product. In such a case it acts in its sphere as a monopolist in lining price and output.

According to Salvatore, the oligopoly market structure is most predominant in the manufacturing segment of the industrialized countries which includes the United States (2007). Some types of oligopoly companies are “steel, automobiles, aluminum, soaps and detergent, glass, cigarette, electrical equipment and breakfast cereals” (Salvatore, 2007). The following are some of the recurring characteristics of an oligopoly: (1) only a few firms participate in a particular market place but bigger than the typical company as it pertains to the size of the companies, (2) these firms offer similar products and/or services or somewhat

Oligopolies are the most competitive market structure. Oligopolies also have mutual interdependence, where the action of one firm can be expected to provoke competitive reaction from the others. In oligopolies companies will try to compete using non price methods such as promotions and offers. There are also considerable barriers to entry in oligopolistic markets. The games console industry can be seen as an oligopoly as there are only three large companies who dominate the market – Sony, Nintendo and Microsoft. Other examples of oligopolistic industries include: retail banking, supermarkets and mobile phone networks.

However most firms in the UK do not operate in these kinds of structures. An oligopoly is a more realistic market structure that most UK firms operate in. It is a market structure that is dominated by two or more firms that sell a range of similar branded products who are price makers.

As previously discussed, price stickiness is one of the implications under the assumptions of the oligopoly model. Since changing price will generally result in the loss of profits and market share; firms compete using non-price related strategies. One of these methods includes product improvement. If firms improve the quality of the product or implement characteristics that their targeted demographic enjoy, they can charge more for the product or attract a greater consumer base. Firms operating in an oligopolistic firm also invest largely in marketing of their product. Raising awareness regarding the product will encourage more sales if advertisements appeal to audience. Branding and consumer loyalty is an artificial barrier to entry and a

Monopoly is the theory of market structure based on three assumptions: There is one seller, it sells a product for which no close substitutes exist, and there are extremely high barriers to entry. Local electricity companies provide an example of a monopolist.

According to Mankiw (2009) a monopoly is defined as a market structure characterized by a single seller of a unique product with no close substitutes[1]. When a business dominates a market, it becomes a monopoly by virtue of its power. A company (or a group of affiliated companies) is considered to have a dominant position in a particular market if it exerts a decisive influence over the general