Characteristics of Monopoly Markets
- A monopoly is a market structure in which there is a single seller
- There are no substitute products
- The firm has complete market power & is able to set prices & control output
- This allows the firm to maximise profit
- There is no long-run erosion of profit levels as competitors are unable to enter the industry
- High barriers to entry exist
- One of the main barriers is the ability of the monopoly to prevent any competition from entering the market
- E.g. by purchasing companies who are a potential threat
- One of the main barriers is the ability of the monopoly to prevent any competition from entering the market
- Many governments define a monopoly as any firm having more than 25% market share
- Regulators act to prevent market share increasing beyond this level
- It helps to maintain competition within the market
The Advantages & Disadvantages Of Monopoly Power
Stakeholder |
Advantages |
Disadvantages |
The Firm |
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Employees |
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Consumers |
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Suppliers |
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